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Hiatus ending ...

Been away; back home now, dealing with a week's backlog of non-writing work (and collating the annual tax paperwork; the UK's tax year runs April 6th to April 5th, which fell neatly during my trip).

As you probably guessed, I have some things to say about the news that the US Department of Justice is bringing a suit against Apple and three major publishers (three others settled out of court) over alleged price-fixing. While I'm not a publishing executive or a DoJ lawyer, I probably know a little more about this than the average person on the Number 19 bus.

However, before I foam at the mouth in public I thought it would be interesting to ask what you think is really going on here ...

206 Comments

1:

Apple are too big and they must be punished?

2:

The DoJ think they're acting against a publishing cartel, and have failed to realise that they are also acting in the interests of a company who are threatening to become (if they have not become) a monopoly provider in the market?

3:

I don't know much about the technical details here, but one thing which definitely strikes me about it is that A Certain Retailing/"Publishing" Firm named after a large river are remaining Vewy Vewy Quiet about the whole business.

Which may well have nothing suspicious about it whatsoever. However, I seem to remember this particular firm were very much against the notion of the agency pricing model being introduced in the first place (to the point of threatening to delist publishers who used it), and that prior to the Apple store getting involved they pretty much had the ebook market to themselves.

Again, there's probably not anything suspicious in this.

4:

... and I meant "is", rather than "are" in the first paragraph there.

5:

There are probably at least 3 different agendas in play here.

I think Google might be involved in this somewhere in the murky background and the ultimate aim might be to try to wrest the e-publishing industry away from the old guard and just leave them with paper. I'd love to see what Amazon make a year from Kindle publications viv a vis paper.

If Amazon win this case, the old publishers won't be able to compete with Amazon in the e-market, and I think they might just on sell their ebook rights to the Amazon/Google monolith (Are they allowed to do this?) As for Apple, I don't think they are really interested in ebooks, they just don't want Amazon/Google to control the market.

The justice dept is pushing this just to teach 'uppity' Apple lesson.

If Amazon win this, then 'regional rights' will be next. I think they want to be able to sell from one site at one price to the world

6:

I think that "Mississippi" ;-) are mentioned on some msn coverage I happened to see because my homepage has reset itself.

7:

Though much of the press has focused on the shift from wholesale pricing to "agency model" pricing of ebooks (which did happen with suspiciously cartel-like swiftness and uniformity), the complaint makes just as much or more of the "most favored nation" terms of the publishers' agreements with Apple, which look very much like price fixing (the big publishers all agreed at the same time to not allow anyone else to sell a book for less than Apple).

US antitrust law used to prohibit "retail price maintenance agreements" outright, but relaxed that prohibition recently (the courts noting that not all such agreements were intrinsically anticompetitive). That all the big companies (and none of the small companies) in a particular industry adopted the same apparently anticompetitive practice and did not suffer a market-share decline as a result, however, will look quite bad in court; it is no wonder than most of the publishers have quickly looked to settle.

The one publisher not looking to settle, Macmillan, is the one that acted first and so probably has the best defense ("we weren't colluding, everyone else just copied our good idea"); it will be interesting to see if the government drops the case against them now.

In my view the whole thing is somewhat overblown. There are not huge barriers to entry in the ebook publishing business, and indeed there are a lot of small publishers who might have used the shift from wholesale to "agency" pricing as an opportunity to undercut the majors if wholesale pricing were a genuinely better way to connect authors to readers. The involvement of Apple is the only thing that makes this complaint remotely plausible, and that will hinge not on the particular facts but on whether such "most favored nation" contracts pass muster with the courts.

8:

What's going on, as far as I can tell. By insisting on DRM on their ebooks rather than adopting a simple wholesale model (tell us how many books you've sold each month and send us a cheque for the wholesale price), the big six publishers established Amazon as a near-monopoly supplier of ebooks. Having done so, they realised that it was a bad idea, and were desperate for some way to regain control of their distribution channel, so they leaped at the opportunity that Apple gave them to use iBooks as a way to beat up Amazon. So they colluded on the agency model where they pretend that Amazon and Apple are just selling books on behalf of the publishers (check who provides end-user support to see that this is in fact fictional).

What is needed as a settlement: Publishers can set wholesale prices for their books and require distributors to pay them that price per book sold. Distributors can charge whatever retail price they like. "Most favoured nation" contracts specifying that one distributor is guaranteed the lowest retail price, or can reduce the amount they pay the publisher in order to match a competitor's price are banned.

9:

I think what they're objecting to the most is the "most favoured nation" clause in the Apple contract: that the price for which an item sells through Apple cannot be higher than a price for which it sells elsewhere. If Apple dropped that requirement, it probably wouldn't be as big a deal.

I'm looking forward to your take on this, Charlie.

10:

Seattle uses Washington DC to slap Cupertino and attempt to cripple New York.

11:

Robert: paws4thought and Megpie71 are correct; you're so wrong you're not even in the ball park. (Which is just how Amazon wants the public to be.)

Full explanation to come in another blog post.

12:

Yeah, you're pretty much bang on the nail. (Modulo some unkind things I will have to say about Amazon's long term business goals and their implications for us consumers and producers in the next posting. Including their willingness to play beggar-my-neighbour, which is what -- along with their tax avoidance -- the DoJ really ought to be investigating.)

13:

Hard-core faith in the marketplace at work? Cheaper always equals better?

Amazon sell an awful lot of stuff. It's going to be hard for the book publishers to argue that books can't be sold at a discount like coffee machines or toasters. I'm not saying that books ARE fungible goods, or shouldn't be treated differently, just trying to understand another view.

And, while I Am Not A Lawyer, it's my understanding that under US law it isn't illegal to try and establish a monopoly / monopsony, just to succeed. The publishers may say they were trying to pre-empt Amazon achieving a dominant position, but the US govt would respond that Amazon weren't in fact a monopoly yet and that if Amazon did become one, then they'd sort it out for the publishers.

14:

Like how Rhein.[euro domain name] are all registered in Luxembourg to minimise their corporation tax liabilities.

15:

Apple and the publishers broke the law.

The agency rather than wholesale model was fundamentally anti-competitive and against the public interest. It needs to be struck down.

If authors don't like these two issues then they need to start looking forward rather than backward. They need to recognise that the publishers are going to fold unless they can really add value (I don't think they can), and that actually they have the power to enforce a way forward where the authors win, if they want to. A standard contract model where authors retain copyright and require open distribution models would be a good start. If everyone, apple, amazon and the publishers don't scream; it's not right. The whole idea of ownership of the means of production was supposed to mean you were in control, and authors own the means of production (doubly so with ebooks).

Oh, and lock in by device manufacturers, be they apple or amazon, needs to be stamped up and down on and explicitly outlawed as against the public interest. If that bankrupts apple, well so be it.

16:

Books ARE sold at a discount, believe it or not.

The real question folks should be asking is, why do Amazon sell books at a loss? (i.e. negotiate a discount off SRP with the publishers on the books they buy wholesale, then discount further so that AMZN actually loses money on each unit sold.)

Hint: the technical term for this practice is predatory pricing. (You might want to read the first paragraph of that wikipedia entry.)

17:

Would love to rail about this but know it wouldn't be professionally clever, so will just make a couple of points:

1. Agency was not about Big Publishing screwing consumers in order to make more money - publishers actually make *less* per eBook under the agency model than they do under the wholesale model.

2. Agency ensured a level digital playing field - under agency, the smallest independent eBook retailer can compete on price with the largest international corporation. Under wholesale, those with deep pockets and long-term pricing strategies (which *some* might describe as "predatory"; I couldn't possibly comment) can use price as a weapon to remove the competition from the marketplace.

Now I must go before I say something I'll regret!

P.S. Sorry to miss you at Eastercon, Charlie.

18:

In your frothing could you perhaps clear up a question I have? Wy don't the publishers just sell their own ebooks, the way say O'reilly does. Why do they need amazon or apple's stores? I mean, if I want your next book, i'm not going to buy a some other book instead. The big ebook stores are convenient, but if I type an author title into google the book will come up whoever is selling it.

19:

Oh yes, there does seem to be quite the whiff of south american rivers in the background.

It is definitely interesting looking at the different arguments between 'price-fixing cartel' on the one hand and 'predatory pricing behemoth' on the other.

The more I read, the more I lean towards the price fixing cartel on this, although KD Ryder did make some very good points about demand pricing of electronic goods in the reponses to John Sergeant's post.

I've also seen a few comments where Amazon said something along the lines of 'we expect a 20% discount on your A list and 40% on your B list because we sell millions of books and if not then you go bye bye'

20:

My guess?

There's a grey area in US law. Apple's deal looks like it's anti-competitive at first glance - the whole "you can't sell through anyone else cheaper" bit - but the fact that a number of the publishers who are supposed to be being disadvantaged by it are going to fight with Apple will muddy the waters there.

Some of the publishers are seeing the agency model as a bad thing, and backing out. Some see it as a way of fighting Amazon's rise to monopoly status, or have sat down looked at the model they currently have and have said "it's not sustainable, we think this is (a/the) way forward" so there's doubtless some fun business politics at that level.

It will be interesting to see what the courts make of it though. It's hard to imagine the lawyers for DoJ managing to paint the big publishers that stay with Apple as the helpless dupes having their market frozen out by the fruity ones.

It will be interesting to see how the courts rule - and how far it gets fought. My feeling is that the US legal system is a lot more political than the UK one. Less a checks and balances part of the overall system as rather active politically.

21:

I have seen a suggestion elsenet that someone in a giant river is very, very good at giving blowjobs.

While I think that is (probably) not literally true, I am somewhat curious as to why Most Favoured Nation is a problem when the Nation is a fruit entering into good faith negotiations, but wasn't when the Nation was a river saying "nice Buy Button you've got there, be a shame if anything happened to it."

22:

Some publishers do sell their e-books. Baen is probably the most visible example, and with a long-running sane approach to e-books.

But just as books needs to be marketed, bookstores also needs marketing, and most readers have very little knowledge about the publishers. Thus, Amazon is the giant spanking bookstore that is visible from miles around with neon lights, while most other e-bookstores are small holes in the digital wall.

It is telling that several Baen authors have instructions on how to get their books onto Kindles, or how to get their e-books, on their home pages. And this is what is arguably a very successful e-bookstore!

Apple could become an instant real competitor to Amazon here because they already sold oodles of devices, could push a decent e-reader in iBooks, and had a visible presence as a digital store.

23:

The way I see it, the fewer the intermediaries between the initial producer(s) of a good and its final consumer(s) (and the lower the power of those intermediaries), the better for everyone involved. In light of this, parties that 'add value' by buying things cheaply in bulk and then sell it piecemeal more expensively should be avoided if logistically possible. Put otherwise, any parties helping the creator reach his or her audience are simply performing a small service for the creator and are best seen as his or her agents. Thus, the agency model is superior to the wholesale model wherever retailers are not unavoidable. Kickstarter and Etsy are better than Wal-Mart.

To me, the DoJ action seems so misguided that it must have been initiated after significant lobbying by some concerned parties (cough... Amazon... cough) trying to get the government to protect their outdated at-risk business model from disruption. Of course, agency is not to be applied to retailers exclusively – publishers should become agents as well. Instead of retailers making the money and paying wholesale prices to publishers, or instead of publishers making the money and paying royalties to authors, authors should make the money and pay some of it to the companies they hired to help them reach their audience.

24:
Of course, agency is not to be applied to retailers exclusively – publishers should become agents as well.

Please go and read Charlie's series on "Common Misconceptions about Publishing" (link in the sidebar). Publishers do a lot of things, notably including taking on the risk. A publisher gives the author money in advance of selling any copies (with a sufficiently established author, in advance of the book even being written) - thus allowing the author to go on writing rather than worry about where the money is going to come from. They also do a huge amount of workflow management: as Charlie has observed, if he did his own publishing, he'd only have time to write half as many books - and he's in a much better position to self-publish than many.

25:

I think it's clear that the collusion between the major publishers to maintain prices is anticompetitive. I get that there's serious angst about Amazon's market power, but the correct answer to allegations of predatory pricing is to get an investigation/prosecution launched, not to get together the the other members of the Big Five and decide, in concert, on new anticompetitive contract terms.

Anybody who's against DRM and for the doctrine of first sale should be on Amazon's side in this thing. Not that you have to be on Amazon's side generally, but you can't pick and choose when buyers have rights and when they don't based on business situations.

26:

It seems like a lot folks commenting are ignoring many of Charlie's previous explanations about how publishers can and do add value to the end product (see specifically "a manuscript is not a novel" comments), and painting (to a greater or lesser degree) publishers as middle-men that simply buy books cheaply from the producers (authors) and sell to the consumers with a nice juicy mark-up. I'm pretty certain that they do more than that.

27:

"as Charlie has observed, if he did his own publishing, he'd only have time to write half as many books " and if you swing a virtual cat around in here you're likely to hit someone who wishes he'd write more.

28:

Whether Amazon is/was committing antitrust violations is not really relevant to the question of whether Apple and the publishers were breaking the law. I don't believe there is a "self-defense" exception to anti-trust law that lets you break the law in response to a competitor, even a dominant one, breaking the law.

If Amazon is violating the law on this, Apple has other remedies than begging the Department of Justice to prosecute. Namely, it can sue in civil court.

If your response to predatory pricing is to collude with multiple suppliers to agree to keep prices up, that looks like classic price fixing. Right now under US law, it is difficult to prove that a company is engaged in a violation of antitrust law by "predatory pricing," but it's very easy to show that a company is engaged in a violation of antitrust law if you can show a price-fixing conspiracy.

A Justice Department lawyer would see Amazon as a hard target, and Apple as an easy target. A big case against Apple and major publishers could be a major career advancement. Either way they could get pushback and political interference, but both Apple and Amazon are big companies. I would expect career DOJ employees to want to pursue Apple and not Amazon. They are motivated more by career concerns than political or philosophical ideas.

I don't think for a second that the DoJ does not know that this lawsuit benefits Amazon. Their lawyers are not stupid. Market share analysis is an important part of antitrust law. They know who the players are and who this benefits. And I'm sure the defendants have told the DoJ all about Amazon, as a way to justify their own behavior and to encourage a prosecution of Amazon.

29:

"Why don't the publishers just sell their own ebooks, the way say O'reilly does. Why do they need Amazon or Apple's stores? "

I'll take a wild guess that it's because for a significant proportion of the target market there is no such thing as a generic ebook. There's the stuff they buy from iTunes bookstore to read on their ipad or iPhone, there's the stuff they buy from Amazon to read on their Kindle and the idea that they could get content from anywhere else simply never crosses their mental horizon so if your product isn't available on those platforms through the default purchasing route it simply doesn't exist, they're not going to go looking for it, and if they did somehow stumble across it they wouldn't have a clue what to do with it...

30:

I don't think that anyone is actually suggesting that Brassica is a "white knight" defending us from the predatory actions ot Tigris-Euphrates.

31:

I'm confused.

Brassica? Do you mean Malus?

32:

Apple and the publishers broke the law.

I think you really need to wait for the court to rule on that one. (I don't expect this case to last nearly as long as DoJ vs. IBM or DoJ vs. Microsoft.)

More to the point, the agency model is how books used to be sold in the old days -- in the UK, the Net Book Agreement was ruled anti-competitive only in the late 1980s, for example, and in France this is still how it is done with the explicit approval of the authorities.

What this is really about is (a) lock-in by DRM server owners, and (b) predatory pricing by a large corporation looking to destroy what it sees as a group of useless supply-chain intermediaries (and those of us on the inside see as a valuable service industry that also protects us from having to deal directly with predatory operations like AMZN).

33:
A Certain Retailing/"Publishing" Firm named after a large river
The current internet meme for referring to That Firm is "the great river of mediocrity that has more money than a Washington lobbyist and none of the social conscience"? From this rather fabulous advert for a non-profit competitor: http://www.youtube.com/watch?v=WTfdqPutk5Y
34:

Wy don't the publishers just sell their own ebooks, the way say O'reilly does.

That's a very good question. I'm not sure there's one single answer to it, either.

Part of it is that if the publishers started selling direct to the public, the fear and loathing it would generate in the retail and wholesale book trade would be of epic proportions -- it'd make the whole Amazon thing seem like a lover's tiff. (Also: potential for anti-trust investigation: high.) Another part is royalty accounting: book contracts generally include specifications for how royalties are to be paid on books distributed through different channels at different discount rates in different bindings. If a publisher sells direct to the public. The arms-length relationship means that if necessary, in extremis, authors have some hope of confirming that a given number of copies were sold via retailers (just by spot-sampling of bookstores, e.g. via Bookscan). If a publisher sells direct to the public, how is an author going to be able to reasonably trust the accounts they provide?

Well, in the case of O'Reilly, obviously they do -- and I've never heard anything bad about Tim O'Reilly. But ORA arose from a radically different publishing industry sector (originally they were a techpubs consultancy who then branched out into publishing books) and the rules may be different.

Anyway, the royalty accounting stuff in my US book contracts goes into mind-numbing detail on indirect sales (i.e. through various channels) but doesn't even hint at direct retail sales to the public. And now that you mention it, this seems like such an odd oversight that there's got to be some structural reason for it.

35:

Can you really justify publishing companies that price the paperback version of a book at under $20 but the electronic version at nearly $60. This is what happened when I tried to buy a book by Alexander Maslow the other day.

I don't read or purchase paper anymore due to environmental reasons, shipping costs, immediate gratification and convenience - Also I find the new high resolution screens easier to read than print in normally lit rooms.

I would like authors to get a bigger share of the pie, but I have to admit I really dislike the restrictions the publishing houses keep placing on me to try and protect their old paper based model.

36:

Meanwhile, I went to my local library's site yesterday morning and this came up, which links to the letter they want patrons to send to publishers. It's a letter campaign to get publishers to change their ebook pricing to libraries. Apparently they are not selling or are charging more to libraries for ebooks. I'm guessing as a way to make up for supposed lost sales? I'm not quite sure what to make of it.

37:

If you are a library attempting to provide eBooks to your patrons, it is a different matter. Not only are some publishers charging libraries premiums (I think Random House charges an extra %30+ to libraries) many are not selling to libraries at all.

For example, I cannot buy even one of your books as Penguin is now refusing to sell to libraries. I'll note, though, that Penguin at least has stated a reason beyond the vague ill-founded fears of piracy and lost sales claimed by most of the other major publishing houses.

I don't know what kind of "mono" it is when one group refuses to sell to a particular type of customer, but as a general rule I am opposed to all "monos" except monogamy (in case my wife is looking).

38:

I think direct retailing is the only sane way out of this mess. We need to bite the bullet and let the retailers and bookshops go the same way as the coal miners of Thatcher's Britain. I read a lt, but I haven't been into a bookstore for a year or two now.

39:

I'll just add that I'm in the AMZN = Evil Internet Walmart camp. More so after hearing about how they sell kindles for a few dollars less than it costs to make them.

40:

Can you really justify publishing companies that price the paperback version of a book at under $20 but the electronic version at nearly $60.

No, I can't and won't justify that; it sounds preposterous.

I have heard of publishers wanting to charge more for some special use cases -- e.g. ebooks in libraries in the USA which will have many, many more readers than a regular sale (and the USA has no equivalent of Public Lending Right, which pays the author/publisher a small fee for each loan) -- but what you describe sounds crazy, unless we're missing something. (Academic publisher, maybe?)

41:

The solution to the library problem is primary legislation to establish a framework for a Public Lending Right fund and disbursements therefrom. Then the problem goes away. This is normal in the UK, Eire, France, and quite a few other countries; the USA is the big exception. Chalk it up to "not invented here" and move on ...

42:

The settlement isn't the end of the world. The settling publishers are only barred from making agreements that restrict retailer discounting for two years. After that, they can make Amazon agree to Agency Pricing again, provided they don't all do it at the same time. They can also push Amazon to sign 1-year agreements that ban them from selling their e-books at an aggregate loss.

Publishers actually do sell a fair chunk of e-books directly off their own websites: 25% of all e-book sales, 13% for trade publishers. If it weren't for the "no retaliation for discounting" part of the settlement, I would expect publishers to amp up direct selling from their own websites in response to the potential loss of pricing control.

43:

Two details that may loom large later:

First off, the settlement that S&S, Hachette, and HarperCollins agreed to requires them to drop *all* "most favored nation" agreements as soon as they legally can, not just those with Apple. So, if Amazon had, in the past, bludgeoned those companies into accepting an MFN, they now have an out on those.

Second, on whether there was collusion: let's remember that Steve Jobs is on tape after the iPad intro telling Walt Mossberg that the major publishers would be withholding books from Amazon unless they agreed to sell on the same terms as Apple (including, specifically, matching Apple's higher prices). This was a couple of days before any publisher had actually had that conversation with Amazon. (Macmillan was the first.) So, there clearly was a coordinated effort of which Jobs had foreknowledge (at least!).

Now one can argue that Amazon's monopolizing activity and abuses were just as bad, but it's hard to see how the publishers (or Apple) could spin that into a legal defense of their own activities...

44:

The publisher is Wiley and the book is called 'Toward a Psychology of Being'. On Amazon the paperback retails at $10 and the ebook at $56.87. I complained to Amazon and they said the publisher had set the price.

45:

Before you promote direct retailing, stop and think about the second-order consequences if we switch to a 100% direct sales model with ebooks as the primary channel for getting books to the public:

* Makes it much harder for readers to discover good new writers. Like it or not, browsing ebooks via a storefront like Amazon is much harder than browsing p-books on a shelf.

* Due to the discovery problem, the only way for a new author to get discovered might well be a hard-sell advertising campaign coupled to an ultra-low cost of entry, e.g. £0.99/book for the first novel.

* This fucks new authors right in the wallet unless they can convince a publisher to subsidize their launch much more extensively than is now the case. Upshot: much lower advances for first novels, much harder to scrabble your way up the pile if you're a new author.

* The switch from physical retailing to online means that the established means of pointing readers at new work -- the genre conventions -- are deprecated, replaced by tag clouds, and "Readers who liked X also bought Y" recommendation systems. Which you need in order to navigate an infinite bookstore with a backlist of millions of obscure or self-published titles. And which may in some respects be a good thing. But SF in particular exists as a dialog between the current and previous generations of authors. (For example, you'll miss most of the jokes in "Saturn's Children" if you didn't read "Friday" by Heinlein first.) This change will inject a lot of random noise into the discussion, possibly destroying it.

TL:DR; I suspect that a shift to pure online retailing of ebooks will hurt the midlist and quite possibly destroy one of the major strengths of SF as a literary form -- as accidental side-effects.

46:

Given what's happened with Borders and small bookshops, I suspect that one reason publishers haven't gone into selling books is that the investment they'd have to put into warehousing and shipping won't increase profits enough to make it worthwhile. Books may be a loss leader for Big Muddy, but they've got a lot of very efficient warehouses that sell a lot of other things at a nice profit. Publishers would have to match Big Muddy's infrastructural efficiencies with less to sell, and that might be hard. Given how much trouble Publishers seem to be having accurately tracking ebook sales, even a virtual warehouse might be difficult for them (*sarcasm).

I'm also curious about what would happen if iMalus went into the electronic publishing business, just as Big Muddy has. I also wonder if the fact that they're a publisher (and presumably thus a competitor) is one reason that Big Muddy didn't get targeted by DoJ in this round.

47:

The book: Toward a Psychology of Being exists in multiple editions. If you go to amazon.com and search for it in all departments, you may well find the first edition available for $8.95 as a paperback reprint. However, the third edition is in hardcover for $59.86 and in Kindle ebook for $56.87.

I agree that the price is somewhat eye-watering, but that's academic publishing for you.

There is a highly suspicious paperback edition listed for $9.99, by "Wilder Publications" since February 2011. As the official publisher is Wiley, a respected academic outfit, and they've only got it in HC for nearly $60 ($85 without discount) my suspicion is that "Wilder Publications" are actually book pirates (although I might be mistaken).

48:

Bryant @25: Anybody who's against DRM and for the doctrine of first sale should be on Amazon's side in this thing.

Excuse me, I'll just be over here in the corner laughing my arse off.

Amazon would like you to believe that it is only imposing DRM because the evil, evil publishers force it to. Nothing to do with locking readers into its own DRM servers so they can't readily buy elsewhere, honest guv. This does not explain why I have had complaints from readers about my books from my small press publisher being DRMed up the wazoo after they have purchased from Amazon, when my small press publisher does not use DRM themselves and as far as I'm aware has never asked any of the distributors to use it.

My philosophical and practical objections to DRM (as both a reader and as a writer) are part of why I think letting Amazon get any more of a stranglehold on the ebook market would be a Really Bad Idea.

50:

#45 Bullet 1 - True this.

Bullet 4 - And the result is recommendations like 'You bought "The Runaways" so obviously you'll want "Twitlight Part Elebentee" ' (despite having marked Twitlight through Twitlight Elebentee-1 as not interested). I'd not mind quite so much if it also came up with recommendations for other Dakota Fanning films and for other rockumentaries instead of concentrating Kirsten Stewart being the female lead.

51:

So, as a long-term book addict who still spends about fifty pounds a month on real paper books (*) if the move to ebooks goes much further will I need to shift too before my suppliers go bust?

And if I do, is there, right now, a serious alternative to buying into the Piranha Paradise Firestarter?

(*) recently been treating Chris Priest's famous commentary as a reading list...

52:

Are you reading genre fiction?

Because if so, ebooks are due to hit 40% of sales this year, and will be at 60% within 5 years according to Tim Holman, CEO of Hachette -- who is being soothing and non-alarmist when he gives this account (I make it 60% in 2 years, 70-80% in 5).

The mass market paperback (in the USA -- there's no such thing in the UK) is on Death Row awaiting a date with the scaffold.

53:

Well, the obvious alternative to Amazon's readers, in the US these days, is B&N's Nook line, assuming that you're more warmly disposed to B&N. These, by the way, support an interesting spin on shelf-browsing --- you can browse any ebook they sell for free, so long as you are in a physical B&N store --- or at least, close enough to be on their wifi.

There are also e-reader apps for a whole lot of the generic tablets that are out there (iPad, the various Android tablets, the Samsung 5-inch "note" if you happen to like that and form factor) --- though getting the ebooks to read becomes more problematic. (Unless the app you choose is the Kindle app, which is available everywhere that Amazon can make it available, including the iPad and iPhone, though *not* the Nook. And of course, that's the only way you're going to get Amazon-exclusive content, including some of the interesting stuff that's cropping up in the "Kindle Singles" line...)

54:

Shouldn't the sale of e-books mirror quite closely the sale of applications/software? With all of the discoverability problems and similar? You can even have trials where the first XX pages are available for free.

And this is coming as a complete consumer of both apps and books, so I may be saying something very stupid...

56:

Wy don't the publishers just sell their own ebooks, the way say O'reilly does.

The same reason there is only ONE Amazon, eBay, etc. Even airlines have the same issue. There are rarely hub airports where there are 2 or more carriers which split the majority of the traffic. At best the splits are 60/40 and usually more one sided. Why are there only 4 (really 2) cell phone companies in the US? Only 2 broadband suppliers in most areas of the US?

The firstust with the mostust almost always controls the market. To the point where others can't compete except in niche markets. O'reilly is a niche. With no practical competition themselves.

57:

I agree that the price is somewhat eye-watering, but that's academic publishing for you.

Why is this? Textbooks are almost always ridiculously priced. Is the academic publishing world very different from the fiction publishers you have described in previous posts? Or is it simply that the target audience for many textbooks is relatively small and thus the price needs to be high in order to earn a profit?

58:

To be fair that's partly because outside of Forbidden Planet, it is increasingly difficult to find the bloody things anywhere - Borders went byebye, Waterstones all stock the same mainstream titles, and the independants seldom stock Genre titles.

59:

It will be interesting to see what the courts make of it though. It's hard to imagine the lawyers for DoJ managing to paint the big publishers that stay with Apple as the helpless dupes having their market frozen out by the fruity ones.

The DOJ and O admin have been spectacularly dense when it comes to business acumen. IMNERHO.

O's talk about "businesses should just hire more people" was a big bozo one. Businesses hire people when they need them. Not as a make work program unless someone is paying for it.

60:

In proper academic publishing, you are combining high print quality and large page formats with small print volumes. That makes each book significantly more expensive to produce. Also, many books are only valid for a year or three until the syllabus changes and they need to reissue with new problems or technology changes.

In the midlist, you get cheaper books by taking shortcuts on the content or on the durability of the book, eventually ending up at the Teach Yourself in 21 Days level of bulk production at low cost.

Plus it is a niche market, and the market up until now was generally willing to pay that premium for the information.

61:

to requires them to drop *all* "most favored nation" agreements as soon as they legally can

Which is interesting as the Federal Government has this clause in every or nearly every purchasing agreement I've seen. But it has been over a decade since I looked at such things.

62:

Time for them to do print on demand in that case.

63:

Shouldn't the sale of e-books mirror quite closely the sale of applications/software? With all of the discoverability problems and similar? You can even have trials where the first XX pages are available for free.

Yes, it should.

A big part of the problem, however, is that publishing runs on contracts between authors and publishers. Publishers can't act outside the scope of those contracts without risking being sued. And those contracts are archaic lumps of legal boilerplate that have been assembled over the decades and withstood the test of lawsuits.

Here's an example of the problem: books are sold as a reverse auction process (they get cheaper as time passes from the first publication date). I'd like to experiment with an ebook that makes this explicit: it launches at $20 then gets 5% cheaper every month until it hits $2.50. More: if you are willing to pay $10 but not $20, you can pay now, get the first 50%, and have the rest of the book emailed to you the instant it drops below the $10 price point. (Or pay the difference to "top up" to the current price -- e.g. you pay $10, then later when the book is selling for $16 you can pay another $6 to get the whole of it.)

I reckon this would sell quite well -- and manage expectations ("author needs to eat: you want cheap reads: you get to decide how much you're willing to pay and how long you're willing to wait"). But there's no way it's compatible with a regular book contract, and it might actually be impossible to hack a publisher's accounting workflow to work with it.

64:

Is the academic publishing world very different from the fiction publishers you have described in previous posts?

Yes.

It might as well be a different industry.

Like comparing the industry that manufactures mid-range hatchback cars with the folks who make backhoes and tractors.

65:

Cross-posting my initial thoughts from elsewhere:

Forbes runs down the essential irony of the case: that at this point antitrust law has been so gutted that if those 5 publishers had just merged they would be harder to prosecute, and that this particular price-fixing is in response to Amazon's equally-questionable price-fixing.

There's not really a good guy to root for in this one. Amazon set prices artificially low in order to sell Kindles; that's to the short-term benefit of customers, but served to further entrench Amazon's control of the book market, and establish it as a monopoly in the ebook space. That doesn't just hurt publishers, it also hurts other booksellers (both independent and corporate), and in the long term that's NOT good for customers.

Which isn't to say that I approve of Apple and the publishers colluding to fix prices, either. It gives us a second player in the market -- which IS a good thing -- but while it gives Amazon a competitor, it's pretty damn anticompetitive with everybody else.

Ideally we'd have Amazon AND Apple getting their knuckles rapped. And publishers starting to realize that DRM is what lets the device vendors push them around.

66:

Businesses hire people when they need them.

Ahem: American businesses hire people when they need them.

There, I fixed that for you. (Evidence that not every successful employer thinks like an American.)

67:

Hmmmm. Summary thoughts.

Afruit wants 30% of something so they want fairly fixed retail price.

Ariver wants to be the seller of everything eventually. So they are more than willing to subsidize one market to drive out competition, then move on to another market.

US Anti-trust law (correct me if you know better) has huge issues due to when and why it was first written. It was and still mostly is aimed at industries. Not at retial businesses like Ariver or Walmart.

Cost to consumers in the short terms seems to outweigh other considerations at the current DOJ. And with previous DOJ's at times. And consumers like Ariver just like they like Walmart. They, consumers and the DOJ, don't see the end game as Ariver owning 99% of the distribution and then the discounts go away. Walmart is almost there in many products that they sell.

Look here:
http://www.fonerbooks.com/booksale.htm
especially the sales for Ariver vs. BN. BN basically flat for 10 years. Ariver sloping up steeply for that period. I suspect if the DOJ prevails it will continue upward until no real competition exists.

Google "amazon book market share" and other similar things and it appears the business press in the US isn't so sure the DOJ will prevail. And many feel the real target should be Ariver.

68:

Print on demand is actually quite expensive, Dirk. While a modern PDF-to-press printer acts kind of like a gigantic laser printer that takes in PDF page images, paper, and ink and spits out book blocks at the other end -- it's viable to do print runs of as few as 500 large paperbacks profitably. The real cost of production is nothing to do with the dead tree side of things and everything to do with the editorial workflow.

69:

they want fairly fixed retail price.

In reading this it comes across with a different meaning that I wanted. Better would be they want a reasonably consistent price across all sellers.

70:

Re academic publishing... my guess as to why textbooks are typically so expensive is:

They have lots of complex diagrams and special formatting and are big meaning lots of editing time.
They are fairly frequently updated and very carefully checked over... more editing time.
They often have many many contributing authors. More oganization and editing.
They have limited sales.
They have companion problems/tests/additional materials/websites who's production costs are covered by sales of the text.
Textbooks are chosen by professors who get their copy for free.

So globbing some of that up into a possibly bad trend: textbooks are really pretty.

However it seems to me that they really are better too. I don't think many people would choose a 1960 text on trigonometry over a 2010 one. The new one surely is easier and more fun to read and its figures are more expressive and numerous. Costs some multiple more, but how much of the real cost of an education are books?

It's something I see in academic papers as well. 25 years ago academics were drawing bar charts and scatter plots in pencil, tracing them in pen, and having them published. This took some time and was rather painful so they kept the final figures simple.

Then the personal computer arrived and lots of totally awesome software for making figures. You can make a simple scatter chart that looks as good as a figure in nature from 1980 in minutes. Oh but you can also spend hours adding shading and making all your pips line up perfectly and choosing 3 different colors and embedding your legend just so and adding little caps to the end of each error bar and making sure all the spaces between the images in a multi-image figure are exactly the same width and the background black levels are identical and on and on... And that's what people do with this technology. They don't make simple figures faster they make better figures perhaps even slower than they used to. And the huge win that came from being able to add more data to a figure and have the software update it instantly... once you do all this formatting stuff when you add more data or change something you often have to rejigger to get it looking perfect again.

71:

I don't think many people would choose a 1960 text on trigonometry over a 2010 one.

You picked a bad example. A good trig book from 1960 is likely to still be a better trig book that most published lately. Especially the when the newer ones include calculator use which has nothing to do with LEARNING trig.

But in most other hard sciences I'd agree.

72:

Thad: Amazon set prices artificially low in order to sell Kindles;

Wrong.

It turns out that the Amazon Kindle Fire's bill of materials is $201.70 to manufacture yet they're sold for $199 -- Amazon is dumping them at below manufacturing price and taking a loss on every unit sold.

My inference is they're doing this to drive uptake of the platform -- a classic predatory pricing pattern.

Again, they've been caught buying ebooks wholesale and selling them to consumers for less than they paid for them. Which in turn drives uptake by consumers.

It helps to note that Jeff Bezos left a hedge fund to found Amazon, and ideologically seems to be a dog-eat-dog libertarian (hence the tax evasion avoidance AMZN excels at, the union busting, and the utter lack of social responsibility they demonstrate at a corporate level). I believe they're playing a long game of beggar-the-neighbours to kill off competition, disrupt the supply chain, and establish themselves as a consumer-side monopoly and a supplier-side monopsony (the latter being helped by their strategy of trying to cripple large suppliers and imposing onerous terms on small ones -- as exemplified by the NDAs they force writers publishing directly with them to sign before agreeing to contract terms: nobody knows what's in their premium author contracts).

Libertarianism is a good self-justification for playing fast and loose with regulatory requirements and saying "fuck you" to the disadvantaged.

73:

"Print on demand is actually quite expensive"

True, but not from a self publishing POV. I have just knocked out a paper copy of my next book, B/W, 100 pages for proof reading and reviews by interested parties. Cost me under £3. Then it will be put out on Amazon (initially) as a DRM free eBook for $2.99

74:

Jeff wrote:
"I don't think many people would choose a 1960 text on trigonometry over a 2010 one. The new one surely is easier and more fun to read and its figures are more expressive and numerous. Costs some multiple more, but how much of the real cost of an education are books?"

It depends, but some of the old (more than 30 year old, as much as 110 years) textbooks I have are more easily readable and informative than the modern ones. Of course it varies depending on topic and curriculum and so on, but some or many of the old textbooks explain things well and cover a lot of ground. Modern ones seem to suit a slightly different sort of learning method.

75:

Re your comment about the Public Lending Right: Are your books available for download in the Edinburgh libraries? I'll note they use Overdrive which is also the leading platform in the United States. The majority of the publishers in the U.S. won't sell books to Overdrive. I know, for example, I can't buy Rule 34 here.

I'm not necessarily opposed to a Public Lending Right, but I don't think the lack of one is why publishers aren't selling ebooks to libraries.

76:

I've never had a problem with companies using certain products as "loss leaders", cross-subsidizing them with other products/services. Movie theaters do this all the time, often making no money on tickets but turning a profit on the concessions they sell with tickets. Apple may or may not be making a profit on iTunes, but it's a vehicle to sell expensive tablets/phones. Hell, the entire network television business is built around this - they give away the TV programming to viewers for nothing (if you have an antenna), then make up the money with advertising.

That's what Amazon is doing, by promoting market share of the Kindle Fire as fast as possible. It's the opposite tack of what Apple's doing with their tablet. Amazon wants to sell you a cheap tablet, then sell you the content to use it (as well as a Prime membership for it).

There's nothing immoral about it, and I find it baffling that people think competing on the price you can afford to charge is somehow "unfair".

I believe they're playing a long game of beggar-the-neighbours to kill off competition, disrupt the supply chain, and establish themselves as a consumer-side monopoly and a supplier-side monopsony

Without regulatory protection, private sector monopolies rarely last more than a couple of years -especially in the Tech/Digital Businesses. The barriers to entry are too low.

Amazon is particularly vulnerable to this, because they're a third-party retailer with super-thin profit margins on their retail business (what's actually profitable for them is their Cloud Hosting business). That's why they've been going into publishing and video production.

77:

I have no idea. (I haven't actually used the local libraries here in years, much less for "borrowing" ebooks.)

78:

Yes, production costs are high on textbooks, but there's also a captive audience, albeit a small one for many textbooks.

One of the odd things about science textbooks is that, to increase market share, you have to increase the size of the book.

As a test: how many of you worked a textbook from cover to cover? Got an example? I'll bet you had 30-50 textbooks to choose from, as an undergrad alone. I think I read two from cover to cover, and they were short.

The point is that, in a semester or quarter, there's not enough time to teach the whole book. However, different teachers think that different topics are important. For example, in a basic biology class, an ecologist will teach a very different class than a molecular biologist will, and a cosmologist will teach physics differently than, say, an fluid dynamicist or civil engineer will.

Many textbooks, particularly in the life sciences, try to capture all of the possible topics for a particular class like introductory biology, so that they'll appeal to as many teachers as possible. When they do that, the book swells and costs go up. I've heard textbook writers talk about that balancing act between providing sufficient content and keeping the cost (and weight) reasonable. It's not simple, and textbooks tend to bloat regardless.

Writers have tried alternatives going back to the 1970s, when they experimented with mini-textbooks that were effectively a chapter or two at a time, and the students were supposed to buy the particular topics they needed (students were poor even then). Those didn't catch on.

Until energy and IT costs start seriously chewing on our online rush, I suspect the academic solution will be to move to electronic textbooks, something that's already showing up. It keeps the weight and production costs down, which *might* help prices. My personal suspicion is that textbook prices won't fall until expensive textbooks stop selling, and I'm not holding my breath waiting for that to happen.

79:

Bullet #1: not universally true: at least in my case, purchase suggestions from amazon ("other users bought also this" and "you may be interested in") have been orders of magnitude more helpfull that parsing the usually thin SF-and-fantasy section of the local (ando not-so-local) bookstores.
And even more helpfull are websites like tor.com and other blogs (like antipope.org, if you know that website :p thank to you and your guest weeks I've discovered many authors).

Maybe it's an artifact of my country less-than-florid book market,even if when I lived abroad it was not really different, but at least for me (and for the genre readers I know) the move to pure online have been nothing if pure bliss.
Also the possibility of getting somebody to know a new author without having to worry about losing my preciousssss original copy (ahem I know that htis is a bit ouside the prescribed market way apart for your Accelerando :p) have helped me enormously spread the word about my preferred authors.
And once tasted, we fanatics are used buying entire bibliographies... :p

Now, not that I wanted to defend Amazon predatory tactics, because they *are* evil, but neither I do not like Apple predatory tactics, and there's plenty going around there too if of a different kind...

80:

Hey! Who hit me in the face with this virtual cat?

81:

Besides the obvious, this could be the start of a prolonged campaign by DoJ and IRS against Apple. They (Apple) have untold billions parked offshore from overseas sales that the IRS can't tax. They hate that.

82:

Could it be an Awesome co-incidence that even as this legal Cantrip takes shape .. and it must surely have been under preparation for a long time .. Rumour has it that the successor to the loss leading Kindle Fire is under production and possibly shipping in May ?

A little while ago I had a look at the I Pad £ ... oops missed keyed there .. I meant the I Pad 3, in the Apple Showroom in Newcastle Upon Tyne. Its a beautiful piece of design and the Retina Screen is as good as you reported it to be. But ..Oh The Price! And then there is the lock in to Apples Garden of Earthly Delights that you have to work to avoid. Happily I took the precaution of leaving both my credit and Debit card locked away at home so my sales resistance wasn't over-strained but it helped that I'd already come upon the rumours of the Kindle Fire 2 ..or the 'Inferno ' or the " Torch " or whatever the hell they decide to call the thing; or rather the Things since the rumours also are that the Kindle £ will come in a mixture of sizes with High Definition screens and a top of range Tablet that looks to be a direct competitor to I Pad 3 but with the Kindle connectivity, and of course much, Much, cheaper than the I Pad 3.


I don't doubt that you know far more about this than I do Charlie, but, here-after a link to one of many Kindle $s rumour sites. This link among many possible because I like the columnists weary speculation that,

" ....Perhaps the Kindle Fire 2 is made from potatoes and powered by clockwork elves. "


http://technomobilesite.com/kindle-fire-2-new-release-date.html

83:

Apple v Amazon is like wondering who you were supposed to cheer for - Hitler or Stalin

84:

More like Boeing vs. Airbus.

I'd rather not live without either.

H and S I can live without.

85:

Businesses hire people when they need them.

Ahem: American businesses hire people when they need them.

There, I fixed that for you. (Evidence that not every successful employer thinks like an American.)

Don't see the problem. The article was about layoffs being avoided, not about hiring people for no predictable need.

I agree with how Victorinox operates. But I bet they don't hire workers not needed or projected to be needed in the foreseeable future.

86:

Oh, I know the company you mean, I think.

You know there is VAT on eBooks in the UK, and the UK VAT rate is 20%. But, because of various definitions made in VAT law, they're only paying 3%.

An eBook is counted as a service, which means that the VAT rate which applies is the one where the servers are located, as long as they are in the EU. This publisher, and also the internet payment service, Paypal, is located in Luxembourg. Apple does the same for iTunes.

The nasty trap is that if the servers are outside the EU, the VAT liability is calculated on where the delivery is made to, just as for physical goods, which is 20% for us Brits. And that tax is paid to the UK.

I don't see any clear statement of the VAT rate applied, which is a bit dodgy for their UK site, at least. It's arguable that at least some of those book are bought by businesses, for use by the business, and they need to know the VAT rate applied.

And it is not just eBooks. that company does a huge amount of business in the UK, but what they do in the UK, putting stuff in the mail, doesn't make them liable for UK corporate taxes.

Apparently, the turnover involved is somewhere over 3 billion GBP. Just how that becomes tax revenue in Luxembourg, I wouldn't care to guess, but it has been reported that HMRC is taking an interest.

The Corporation Tax issue

How they hunt tax loopholes, and lie to politicians

87:

Amazon has learned well by watching US government handle (cough, cough) the US banking crisis.

88:

Actually, major academic publishers have been producing print on demand texts for some time. I ordered 5 copies of an obscure text from Cambridge in 2006 and they produced precisely 5 copies and mailed them to the uni bookstore. They came to $60 each. In paperback.
Keep in mind that the other costs of publishing also apply to academic publishing - so very small print/publication runs (of high quality books - printed on acid free paper and extensively edited, proofed and reviewed before publication) are going to have eye watering prices, whether in ebook format or print format.
As Charlie noted, the academic press industry is VERY different from general publishing. The academic textbook industry is different again - numbers sold are often highly predictable and the purchasers (being students) often HAVE to buy the books, sometimes in substantial numbers.

89:

More like Boeing vs. Airbus. ... I'd rather not live without either.

But I'd rather there was a bit more diversity in the market, nowhatimean?

Where are the crazy Beriev design bureau trans-Atlantic 6000 ton Ekranoplans, the next-gen version of the BAe-146, and the Japanese trans-Pacific SST?

Monocultures -- or duocultures -- are bad.

90:
It turns out that the Amazon Kindle Fire's bill of materials is $201.70 to manufacture yet they're sold for $199 -- Amazon is dumping them at below manufacturing price and taking a loss on every unit sold.

Well, the Fire's new and specifically a response to the iPad; I'm not sure if they're selling the e-ink models at a loss or not. But the point, as you say, is this:

My inference is they're doing this to drive uptake of the platform -- a classic predatory pricing pattern.

Again, they've been caught buying ebooks wholesale and selling them to consumers for less than they paid for them. Which in turn drives uptake by consumers.

Whether or not they're turning an immediate profit isn't the point; the point is that people are buying Kindles and, once they start buying ebooks from Amazon, they're locked into the format. The device itself is a means to an end -- that's why there's a Kindle app for iOS.

That said, they've sold a hell of a lot of Kindles, whether they turned a profit on those sales or not, and you and I are on the same page on why they're so eager to do that.

It helps to note that Jeff Bezos left a hedge fund to found Amazon, and ideologically seems to be a dog-eat-dog libertarian (hence the tax evasion avoidance AMZN excels at, the union busting, and the utter lack of social responsibility they demonstrate at a corporate level).

Not to mention the purported sweatshop-like conditions in their warehouses.

I live in the Phoenix area and I've worked in a warehouse. I was fortunate to have a boss who'd say "It's too hot out there; you're done for the day" and tell me to find something to do at my desk in the AC. I don't imagine the local Amazon warehouses are run that way.

(It frequently hits 110 here in the summer. A warehouse with a swamp cooler can get above 90, and of course the swamp cooler makes it humid as hell. And that's aside from the other hazards of life 'round these parts -- if you live here long enough, sooner or later you're going to get a lung fungus, and in my experience working in a dusty warehouse is the quickest way to do it.)

My state recently rejected a bill to tax online retailers. I believe the general stupidity of the Arizona Legislature is internationally notorious, so this isn't exactly a surprise (it doesn't even really make the list of the stupidest decisions the Arizona Legislature has made in the past two months), but I don't think this will go away -- even as Republican/Libertarian a state as ours has to acknowledge at some point that it's running a crazy deficit and there's not much left to cut.

I believe they're playing a long game of beggar-the-neighbours to kill off competition, disrupt the supply chain, and establish themselves as a consumer-side monopoly and a supplier-side monopsony (the latter being helped by their strategy of trying to cripple large suppliers and imposing onerous terms on small ones -- as exemplified by the NDAs they force writers publishing directly with them to sign before agreeing to contract terms: nobody knows what's in their premium author contracts).

Libertarianism is a good self-justification for playing fast and loose with regulatory requirements and saying "fuck you" to the disadvantaged.

There's something my dad once said to me: Any time a politician says his bill "helps small business", he actually means that it helps big business. It's a good rule of thumb.

They can talk "free market" all they like, but taxing one business and not another ain't any kinda free market I ever heard of.

91:

Well, you should check it out. Libraries are often an entry point for consumers. I know for a fact we had one patron who borrowed the physical book, Family Trade, from us, liked it, and then went out and bought the rest of the series. That's money in your pocket.

Your publisher won't sell us that title, so you are missing out on similar behavior for electronic customers. That's money not in your pocket.

92:

A couple of things:

1) Is it possible to track downloads of pirated books? This is way outside my sphere of competence. It would be quite useful to track piracy as an indicator of the success or failure of the pricing models publishers and retailers are using. Even if the tracking is approximate.

2) I use both dead tree and e-books. Charlie, would it be reasonable to ask for a steeply discounted (less than US$5) or free copy when I buy a dead tree book? Example; I just ordered a 763 page book from Amazon. Since I will be traveling next month, I'd really like an e-book copy. Obviously, I don't want to lug the hard cover around.

93:

Charlie, would it be reasonable to ask for a steeply discounted (less than US$5) or free copy when I buy a dead tree book?

Hell yes!

If it was up to me, hardbacks or other trade books would be sold either discounted without an ebook, or un-discounted but with a free copy of the ebook. (With the ebook available unbundled as a separate purchase. And the discounted-but-no-ebook edition and the ebook-only edition costing a bit more than the undiscounted-and-both package.)

However, the biz seems to be settling on the idea that ebooks are a distribution channel, like hardcover/trade paperback/mass market. Which is not entirely brain dead but has contractual side-effects.

94:

The comics market's trying a bit of that -- some of the big titles are coming out in two versions, one of which costs a buck more and includes a download code.

Course, as much as anything that's because (periodical) comics rely on specialty shops and the publishers are being (justifiably) careful not to bite the hand that feeds them. Prose books aren't as niche a product.

My local independent bookseller DOES have flyers up advertising a way to buy ebooks through them, but I'm not quite sure how it works.

95:

I think the DoJ means well. But they appear to be only looking at what is immediately better for customers in the very short term -- and not looking at how product dumping by AMZN has been destroying all other channels into which books are sold leaving eventually just AMZN. It would be very bad for consumers if AMZN is left as the only bookseller standing. But that's what's going to happen if AMZN can go back to selling books at a loss.

The agency model puts all booksellers on more even footing.

Go back to the old model and you will just have AAPL and AMZN selling ebooks (since they will be the only ones able to absorb the losses w/ the ensuing price war) -- and that means just those two retailers will be selling books some day (as traditional book sales decline in favor of eBooks). Since AMZN has the larger selection and its own publishing environment (and the physical book sales to bridge the transition), they will eventually even squeeze AAPL out.

Then once AMZN is the only game in town for books, they can leverage that for other things. Or jack up margins. Or both.

96:

This has nothing to do with a duopoly in commercial aviation , when it comes to the big jet category. In the medium sized and small sized regional jets there are four major builders, Airbus, Boeing, Bombardier and Embraer and there is STILL no technological innovation there.

It's just that both the the builders (of all sizes of planes) and the airlines are incredibly risk-averse, and that the airlines want just one thing different from year to year: Airliners that are cheaper to operate.

Boeing proposed many advanced designs over the last decades, some were slightly supersonic planes that were just as cheap to oopearate as present ones but faster. The airline answer was always the same: We want planes that are CHEAPER to operate, not "just as cheap" and you can forget about the speed stuff.

So, they got the 787, which is a tad cheaper, and the Airbus A380, which is also a tad cheaper when you somehow manage to fill all those seats.

Airlines want even cheaper planes still, so the next innovations will be relatively slower regional jets based more or less on M.I.T. 's "double bubble" designs. My guess is that Embraer or Bombardier-Canadair will be building the first ones, because they are ina hot competition between each other in addition to keeping Boeing and Airbus and lesser builders off their turfs.

And I have no idea why you would want a follop up to an ill designed plane like the BAe 146, but Embraer is currently designing (their KC-390) something better in more or less that size, and will be selling it to military markets.

97:

Charlie, re discovery problem

I think you may be over-egging the benefit of physical paperbacks in bookstores as a discovery mechanism. It's a long time since I've been in a bookshop, and longer since I looked along a shelf and saw a book by "A E Bogget" that I bought. It's well recognised that bookstores are dying; and time poor, and just plain poor, individuals are less likely to buy on spec from a store which is further and further from them.

Against that is the ability for eBooks to be an impulse purchase, direct from a site that reviews them.

I'd suggest that the one to two hundred books you might sell via the first method is matched by the sales volume of the second.

Instead, I see a semi-freemium model developing, with small excerpts, or intro short stories, being given away for free - linked directly to the opportunity to buy the full book, or serialised novel. Couple that with a kickstarter approach to advances, and I can see a viable model for authors where 60-80% of the purchase price is author margin.

What I can't see is a place for publishers.

I know you have explained at length on how you consider publishers to be valuable, but I just don't think they are going to survive. The rake off is too high, the value added too low - and amazon are quite ready to cut their legs from under them. Better to accept things and work out an AUTHOR led model now; than be led by the nose by the apples and amazons to the slaughter.

Legal boilerplate is an unimportant sideshow, relative to the magnitude of the change that needs to happen - if you are selling yourself, who needs an out of date contract? I do see a role for light weight intermediaries - akin to web hosts who arrange things as service provision to an author. Copy editing, etc. are a separable issue to the distribution one - and one where a variety of methods exist.

Too much clinging to a past that's not going to be there in 5 years, no matter what. Too little planning and action to grasp a viable future.

98:
What I can't see is a place for publishers.

I know you have explained at length on how you consider publishers to be valuable, but I just don't think they are going to survive. The rake off is too high, the value added too low - and amazon are quite ready to cut their legs from under them. Better to accept things and work out an AUTHOR led model now; than be led by the nose by the apples and amazons to the slaughter.

Legal boilerplate is an unimportant sideshow, relative to the magnitude of the change that needs to happen - if you are selling yourself, who needs an out of date contract? I do see a role for light weight intermediaries - akin to web hosts who arrange things as service provision to an author. Copy editing, etc. are a separable issue to the distribution one - and one where a variety of methods exist.

So the part where Charlie has said that he would only be able to write half as many books under than model has escaped you completely? Not too mention the authors that wouldn't be able to publish at all given that model since it puts all the risk on them.

Of course they call always do without all the things publishers contribute to making a manuscript a book. I've bought a number of them on Amzn for 0.99c. I have yet to find a /single one/ that wouldn't have been significantly improved by a publishers hand. In fact, most of them are just dreck.

99:

I'm not sure that Amazon are engaged in predatory pricing. Predatory pricing only works under a fairly limited range of circumstances. The market must have high barriers to entry and the business must have deep enough pockets to outlast prospective entrants, if those both apply then it is possible to use predatory pricing in order to secure the extraordinary profits of monopoly. Neither really apply to book retailing, Amazon is smaller than some potential competitors and they don't face especially large barriers to entry as it would be a relatively simple extension to existing operations. Apple and online software retailers such as Valve already have the online infrastructure. The supermarkets already have substantial online retail operations and could easily expand this to ebooks, they already sell extensive lines of physical books. All of these make enough money from other operations that they could outlast Amazon.

The pricing of the Kindle at slightly below manufacturing cost looks more like hitting a psychologically important price point without losing too much money, that estimate is that they lose $2.70 on each Kindle Fire, even a small error in the estimated price of one or two of the components may mean Amazon aren't actually losing money. If the main restriction on sales is the customer not having an e reader then taking a small initial loss to get the customer in the store may be worthwhile even without any lock in. It isn't like the situation with mobile phones which are sold at massively less than the cost of manufacture with the money made back on the contract.

The Net book agreement had been allowed to continue in 1962 by the Restrictive Practices Court, without the Court's approval the NBA would have been illegal, in August 1994 the OFT referred the agreement to the Court in 1995 several major publishers withdrew effectively killing the NBA the Publisher's association withdrew from the case in 1996 and in March 1997 the court ruled the agreement contrary to public interest and therefore illegal.

100:

Nope, rochrist, it didn't escape me. If you note I suggest the role for 'light weight intermediaries' - providing services to authors. The difference however is that they would need to be agile, and obviously provide value that an author would buy. Contrast that with the publisher, who authors have to bow down to, and who seem to have built a slow moving bureaucracy that is more interested in authors as cannon fodder, rather than clients.

In theory, maybe, the publishers could revolutionise their model, but I very much doubt that they would be up to it. Couple that with the way large out-competed monoliths have a habit of imploding rather quickly, and I think the publishers as we know them will fold. Best not to build your long term future plans on them.

101:

So, I should not have a Kindle and buy e-books from Amazon? Am I an uniformed consumer that is contributing to the issue?

If I had a Nook and bought from Barnes and Noble, same deal or slightly less evil? I ask as my house is about full up with paper and hardcover books and e-books helps to resolve. The Kindle Touch is kind of nifty and I can change the font size...

Charlie is completely right that browsing on Amazon's kindle section is a mess.

-Jeff

102:

The problem with that Ian is that the author then is responsible for financing the preproduction work. So, instead of having money in the bank before he writes the book, or after he's written it but during the production phase, he finances all of it, takes all the risk, and one book that doesn't sell in sufficient numbers takes him out of the game. One of the major /points/ of publishers is that in assuming risk, they allow writers to do what they know how to do: write, and not be business managers.

103:

It isn't just with books that Amazon has been guilty of predatory pricing. I work for a local fish shop (LFS), and recently products from Hagen have started showing up on Amazon retailing for at or below our wholesale cost. This stung pretty hard because 1) historically, Hagen had MAP pricing to avoid exactly this situation which was part of why many LFS's carried their products and 2) they make pretty solid products so just ditching their brand isn't easy.

That said, the aquarium industry is a funny beast. It is possible nowadays to be an aquarium enthusiast and never step foot in a brick-and-mortar shop, but most people prefer to see a fish/coral/plant before they buy it and shipping glass boxes isn't cheap or without risk, so plenty of people still flock to a decent store where they can find reasonable advice, livestock, and products. As good as Hagen may be, there are other good brands and many new brands trying hard to break into the market. With how specialized this hobby is and how badly it was hit by the recession, a good store draws in business from far beyond the local market. We have customers who regularly frequent our store from well beyond a 50 mile radius and occasional visitors from much further. Our customers don't just grab things off the shelves and pay and leave. They ask for advice. They bring us broken (or incorrectly installed) filters/lights/pumps/etc. and ask us to fix them when they aren't working the way they expected. Even many of the people who buy mostly online still come or call and ask for advice on products and brands before making that purchase. I do often recommend Hagen products, because they are good products and we carry them because they had before the Amazon flap also been good business partners. But they aren't the only good products and they seem to be quickly realizing that out-pricing the people who explain the equipment to the customer so they can make quick sales to bargain seekers is a bad idea.

It remains to be seen how it will all play out, but so far (as I understand it) they have started discounting products to stores and charging online sellers like Amazon more to bring prices back more closely in line, though MAP pricing hasn't been re-instituted yet.

104:

You're missing one very important dynamic – platform lock in. I have about 500 books in my Kindle library now. And because of this something really drastic must happen to inspire me to switch. Indeed, it's why my latest e-rereader is a Kindle and not one of the new Nooks, even though I find the latter to be much better designed.

Amazon does not need to care about book retail, only e-book retail – the physical book market will die by itself. And in the e-book market, Amazon does have all the ingredients necessary to be a predator and is, indeed, acting like one... apparently with the DoJ's help.

105:

Kindle has me locked in because as an Australian we aren't even allowed to buy from B&N. So the Nook is useless.

106:

The thing is you aren't locked in. While buying through Amazon is easier and the post sales support is simpler, due to things like whispernet. The Kindle will work quite happily with books purchased elsewhere, provided they are in one of the several open formats supported by the device. You can download stuff using the on board web browser or by connecting it to your computer using a USB cable. If a competitor wished to have their own software transfer stuff to the kindle automatically they could simply ask you to plug the kindle into your computer and treat it as a USB drive.

Basically Amazon's behaviour isn't consistent with predatory pricing, which isn't going to work on that marketplace anyway. They appear to be selling the device roughly at cost and giving away the kindle software in order to get people to participate in the market at all.

107:

Poor Apple. They want to jack the price up for all and make more money. And that evil government is stopping them. And you love Apple more than you own money?

108:

"I have no idea why you would want a follop up to an ill designed plane like the BAe 146, but Embraer is currently designing (their KC-390) something better in more or less that size, and will be selling it to military markets."

Personally I remember the BAe 146 with some affection from the days when it was the only thing faster, quieter, and more comfortable than a DHC Dash-7 which could get in and out of London City Airport. The high wing configuration was nice as well as it meant a better view...

109:

I think the barriers to entry – or the lack of them are the thing here.

If one organisation is successful in creating a monopoly by selling ebook readers at cost and selling ebooks at below cost then I think they open themselves up to one or two problems.

The first is that they create in the minds of the consumer the impression that the real price of an ebook is below the cost of producing it. Aghast readers, shocked that their expectations about the long price of ebooks have been disappointed revolt and turn to piracy.

The second depends on barriers to entry but if an organisation having establish a monopoly and successfully moved the prices back up to super-normal profit levels then they have made themselves a big fat target. Not just a target for the competition authorities (although the a Standard Oil break up does sound like fun). They also become a target for someone else to do to them what they have do to the rest of the industry.

I’d phone up the factory in China that makes Kindles and ask them to make me some and then sell them at cost and I’d phone up whoever controlled the content I wanted to sell and offer them 10% more than they were currently being offered then I watch as the monopolist reduced their prices, count the super-normal profits I was making whilst they lasted and hope that my cheap and cheerful operation had enough legs to stay in business in the face of below cost pricing for the large monopolist organisation.

Or I’d hope that they worried enough about me tipping them off the major player position that they would offer to buy me out. Rinse and repeat.

Or if I were really cheap I pretend to set up a small competitor and see how much money I could make with a nuisance law suit.

You don’t necessarily need active competition to prevent monopolies gaining super-normal profits. The threat of easy entry can be enough to keep the monopolist nearly honest.

110:

And I have no idea why you would want a follop up to an ill designed plane like the BAe 146
Ok, I'll bite. Exactly why do you consider the BAe 146 to be ill-designed? When answering, please note that I have flown in one.

111:

I know you have explained at length on how you consider publishers to be valuable, but I just don't think they are going to survive. The rake off is too high, the value added too low - and amazon are quite ready to cut their legs from under them. Better to accept things and work out an AUTHOR led model now; than be led by the nose by the apples and amazons to the slaughter.

What you don't seem to get is the role of publishers.

Publishers shoulder much of the risk of publishing; it's not a cost-free activity to turn your manuscript into a book and start selling it, and they go as far (if you're an established author) as to front you a large chunk of the anticipated profits to live on while you write it.

A secondary part of the risk they take on is negotiating with retailers. Right now, AMZN's terms for authors publishing ebooks directly through the Kindle store are relatively good -- there are big problems, though. But given Amazon's predatory behaviour elsewhere, and history of squeezing the big suppliers, it is a dead certainty that if the big publishers were no longer around to offer an alternative supply chain, AMZN would put the squeeze on us authors very hard indeed.

It is received wisdom in the internet sector of the IT industry that content is a commodity, because IT industry start-ups are funded by investors who are looking for profit multipliers -- investments where the profits scale with sales, not with number of staff engaged in the activity (software vs. service industries, in other words). Content production is inherently a service-sector operation; moreover, writing is one where the basic unit of production is the individual writer. What it boils down to is: I am in a position equivalent to a solo contractor. Right now I have a choice of many customers I can sell my labour to. But if the big publishers die, then I may suddenly find myself living in the Amazon company town. And this will lead, in fairly short order, to you getting no more Charles Stross novels because I'll have to go out and get a real job.

112:

Where are the crazy Beriev design bureau trans-Atlantic 6000 ton Ekranoplans, the next-gen version of the BAe-146, and the Japanese trans-Pacific SST?

Foundering on the inability to sell the An-70 (protectionism of military production), the inability to sell the BAe 146 (turboprops being cheaper than a Regional Jet), and the inability to sell Concorde (back-then 1970s campaigners against sonic booms and ozone damage, and now videoconferencing).

Nope, I want to take a trip on a Skylon or a LAPCAT :)

http://www.reactionengines.co.uk/lapcat.html

The likely contenders would have to be regional and protected - which probably means military contracts to start with, a hint of national pride or vanity, and an unwillingness on the part of East or West to sell to the nations concerned (it worked for the Brazilians and Argentinians; the indigenous South African industry haven't flourished; I think Indonesia is still working on it).

That runs up against doctrine mismatches in the end-user (e.g. an American Armor officer will demand a different balance of capabilities of a tank from a British one, from a German one, from an Israeli one; and that's just a tank) and protectionism in the guise of strategic independence (see the US replacement competition for the KC-135).

A contender needs to find a niche that they can fill more cheaply than a mis-used offering from one of the big players. Unfortunately, "cheap and good enough" beats "excellent but expensive"; and developing an entire industry is hard (it's taken two decades of effort for Korean car manufacturers to be taken half-way seriously, and that's just a car).

Anyway, back on topic. I'm very tempted to buy that new TSR.2 book...

http://www.tsr2.info/

113:

The most likely "lightweight intermediary" is actually a literary agent.

Consider: most agents have publishing backgrounds in editorial or marketing roles. They're on commission and they know a bunch of authors. They're in a good position to hire copy editors, layout professionals, and to handle the main editing work themselves. They're also used to contract arm-wrestling with publishers, and this skill set may be applicable to recalcitrant ebook storefronts. Because they have multiple clients they might have a modest amount more leverage than solo authors.

In fact, given the skills balance in a typical medium sized agency, and the fact that most major publishers outsourced their copy editing/typesetting/printing/warehousing facilities decades ago but retained their sub-rights licensing divisions, the difference between an agency and a publisher is a bit like the difference between a sprinter and a swimmer -- different muscle groups are emphasized but they're both athletes.

The fly in the ointment with this option is that there's a conflict of interest situation. Right now, I can rely on my agent to count beans on my behalf: if I think a publisher is underreporting sales, they've got an incentive to audit the publisher accurately on my behalf. If the agency is selling direct, though ...

114:

You said .." You can download stuff using the on board web browser or by connecting it to your computer using a USB cable. If a competitor wished to have their own software transfer stuff to the kindle automatically they could simply ask you to plug the kindle into your computer and treat it as a USB drive. " ..and That is why I hung fire on buying the beautifully designed and Tech SHINNY I Pad 3 the other day and will probably buy the new Kindle Fire Two I Pod Adversary, with my final decision depending on it's specification and price of course.

Hum, now there's a good name for the forthcoming new top of range Kindle Fire 2 .. the kindle " Adversary "

115:

The thing I wonder about is this...

I think I understand the value of publishers. I've a number of friends who write (technical) books and they all say nice things about what the publishers do for them. The arguments you make about the value of publishers in your industry make sense.

But is it enough added value to "win"?

I've a nasty feeling that the world will quite happily put up with fewer Stross books, fewer new authors breaking out, and a general lower quality if they get it all for a few quid cheaper...

If we take it as read that publishers should win, what would need to change to let that happen?

116:

If we take it as read that publishers should win, what would need to change to let that happen?

That's both simple and very complex to solve.

My take on AMZN is that they're at least as predatory as WalMart. The problem is, regulatory oversight permits the big retailers to do this stuff -- employ staff without union rights or health coverage in the US, screw suppliers into the ground with "most favoured nation" terms and all sort of twisted and unconscionable shit, and prioritize price over quality at every point.

Anti-trust regulations in the USA were established to control predation by industrial producers, not retailers. The law needs modernizing, basically.

As for publishers ...

Yes, the past 15 years have been a huge wake-up call. The big six are cumbersome and problematic, despite internal attempts to modernize them. There are second tier publishers waiting in the wings, but any that grow big enough to be taken seriously tend to be taken over (that's how the big six emerged, following a wave of take-overs in the 1980s). Given a better anti-predation regulatory environment for retailers I think the way would be clear to consider anti-trust action against the big six to break them back up into smaller, autonomous publishers -- from the big six to the medium thirty-six, so to speak.

Under which circumstances, we'll probably finally see new publishing models start to emerge which are designed for the internet/ebook age, rather than trying to bolt a compatability layer on top of a baroque, creaking mess of 19th century legal code.

117:

That could be depressingly close to the truth.

From a pure profit point of view, would the industry really care if the only authors producing books were the James Patterson Collective and a handful of other other top name authors?

And even more depressing, would the vast majority of the book-buying public care?

118:

I presume that by "the vast majority" you mean the ones who buy 2 or 3 "airport novels" every year. I seriously doubt that they'd even notice. The "vast majority" in terms of book sales though are probably people like thee and I who buy several books every month.

The reason that it doesn't look like this in terms of sales/earnings is that we buy 1 Charlie Stross, 1 Ken MacLeod, 1 Iain (M) Banks, 1 Justina Robson, 1 Elizabth Moon, 1 Cat Valente... where most of the airport novel sales are concentrated across about 6 authors.

119:

Hmmm, not a bad idea Charlie. Literary agents do have that 'hunger'/customer focus that is missing from the big publishers. My only question is, once there are new authors that have learnt to organise a reasonable workflow themselves, offloading to contract staff and making it happen because its easier than acquiring an agent - will they be that interested?

It's quite a turn around from agents auditioning authors to authors auditioning agents.

I'm actually thinking that the hub of the service industry might be in the copy editing element. Together with layout, that seems to be a key stage, and less risky than the other elements - but a distinct and usually customer focused part of the process. Rebranded as 'book creators' you can see them being to easily demonstrate value, as well as being a pretty stable profession that could acquire practitioners. Appointing CRM 'agents' then makes sense.

You have obviously consider the issue, so what are your thoughts on a future focused business structure for the industry? What needs to happen to make it real?

120:

I'm wondering where Google is in all this.
They are about to launch a Tablet as a direct competitor to Fire and they also have the world's biggest collection of books.

121:

> Like it or not, browsing ebooks via a
> storefront like Amazon is much harder
> than browsing p-books on a shelf.

I live on the outskirts of a suburban metro area, near a US state capital. The last bookstore within 25 miles closed some years ago. With little fresh product in the supply chain, most of the used book stores have closed as well. If you want to buy a paper book locally, you have the short rack at Wal-Mart and a few video stores. The racks in most grocery or convenience stores vanished long ago. The Wal-Mart and video store stocks are the same old Stephen King, Robert Ludlum, JA Jance "best sellers", new or reprints.

When I visit elsewhere, the first thing I do is check out the local book situation. *Most* places, judging by the phone book and talking with the locals, are no better off. Fewer people read now, and in most places there's simply not enough reader density to support a retail book outlet. The stores are gone, and I don't see them coming back.

Even if the situation is rosy in the urban areas, they're still only about half of your potential customers.

It seems many people think of local vs. online as a convenience issue, but for a huge chunk of potential customers, online (either paper or "e") is the only way they're going to find out about or purchase your book.

I found a hardback copy of one of your books in a flea market. It didn't come from anywhere around here; it most likely came in via someone at the local military base.

122:

But if the big publishers die, then I may suddenly find myself living in the Amazon company town.

Tying back to other recent discussions is what pure libertarianism takes us to in developed countries. Not Somalia.

Company towns suck. Hard.

123:

Dirk, Google is not a book store.

Google is an advertising corporation (remember DoubleClick?). What they want is eyeballs. To that end, they're about making sure that all your clicks belong to them. Books are a lousy advertising medium (book contracts generally strictly forbid embedding ads in them) but might be an attractive add-on to drive sales of a tablet for BROWSING THE WEB (and seeing their ads -- hint).

Apple is a hardware corporation. Content and apps draw people to buy iPads and iPhones. The profit margin on their hardware is so vast that if they actively lost money on the iBook store or iTunes store it'd still be worthwhile to run them as a marketing activity to draw in the customers.

Amazon is an online retailer and their profits come from somewhere else ...

124:

Like the DeHavilland Canada Dash-7 the BAe 146 was designed for a stillborn market of short runway STOLports.

Also, like the Dash-7 the BAe 146 was designed with STOL performance safety in mind, and with the ignorance of newer engines which would make two-engine planes much safer than before. A two engine plane with big engines is cheaper to maintain than a four engine one with relatively smaller engines.

Then, there's the small matter of a faulty bleed air system/wing/aerodynamic/engine design leading to toxic fumes entering (in certain weather conditions) the cockpit and poisoning the flight crew, now and then. It was a design flaw they had in common with the 757, but they were more vulnerable as a series because of that tiny STOLport niche they were intended for.

It's like if somebody started a paperback - only book publishing business today, blissfully ignorant of what the eBook creature is going to do to the format.

125:

> the VAT liability is calculated on
> where the delivery is made to, just
> as for physical goods

So *THAT* is where the state legislature got that whacktard idea a few years ago! And announced it December 14, to go into effect January 01... while the whole state government effectively went offline for their holiday vacations, and were thus unavailable for answering any questions at all.

I'm still catching up on the sleep I missed while patching a client's billing system to deal with that mess.

I just hope they don't get the idea of "tax holiday", or I'll have to go back in there...

126:

Tim Carmody in Wired (http://www.wired.com/epicenter/2012/04/bezos-holder-settlement/) makes eactly the point that all this is just playing even further into Amazon's hands.

127:

One or two literary agents have been trying to work out how to do the intermediary thing *without* creating a conflict of interest, for the benefit of their authors who want to digitally self-publish their out of print backlist (and/or things that don't suit print markets for length reasons or whatever).

Kristin Nelson discusses her attempt to square the circle on her blog. It's worth reading the post and the comments thread for some insight into what she's trying to do and why an honest agent has to be very careful about exactly how they go about it.

128:

The people who buy one or two books a year aren't "the vast majority" a 2005 survey for Book Marketing Limited and the Arts Council England indicated that annually about 33% of UK adults bought no new books, 27% bought 1-5, 16% bought 6-10 and 22% bought 11 or more. The average was about 8.

129:

Apple's published it's response - you can read it (all 4 lines) and commentary here: http://tech.fortune.cnn.com/2012/04/13/apple-keeps-it-simple-the-dojs-case-is-simply-not-true/?source=yahoo_quote

130:
It seems many people think of local vs. online as a convenience issue, but for a huge chunk of potential customers, online (either paper or "e") is the only way they're going to find out about or purchase your book.

Yup.

I live in Dorset (South West UK for those not aware) - not even the most rural part of Dorset. No book shop in my town - the last one closed down about five years back after it was run into the ground by idiot who thought it would be a nice retirement business (he literally purchased books by the pound... didn't understand the tourist and school book trade, etc... sigh...).

Borders dying removed the closest to a "proper" bookshop in the nearby area. What's left nearby are what Waterstones' turned Ottakar's into after they took over. Went from a nice interesting book store to being yet another small-Waterstone's with little genre fiction. Oh yes - there's one second hand book store that has a single bookshelf of "new books" - mostly stuff for the tourists.

These days the only time I get to enjoy browsing in a book store is when I travel up to London.

I love book stores - I just don't have access to any that are useful to my reading preferences. Locally libraries are much more likely to get a new paper book in my face than the bookshops. Most of my new reading gets on my list via my social networks (on and offline), places like this, and Amazon recommendations.

As an aside - I'm curious that most of the stuff I've read about peoples usage of ereaders is about their reading habits have changed (how much the like/hate having physical books, difference in reading quality, etc.).

For me the big difference is about the purchasing. I've bought a lot more books post-Kindle (and that's reading on the laptop or my iPhone - no e-book reader). Mostly because I have zero willpower. It's scary how much a difference it makes to my book buying habits when it's easier and faster for me to buy a new book (sitting in my chair immediately after finishing the last one) than it is to get up, walk to the lounge, and pick something else off the bookshelf.

Books have gone from special purchases that took care to arrange (when Borders existed it would be, at best, an hour's journey each way to get to the store) to impulse buys.

131:

Wow. Given those figures, where 70% bought less than the average, those 22% buying 11+ must have had some serious outliers.

That being said, they did only survey 2000 people, so that makes sense.

132:

Yup. I do indeed mean that 1 or 2 airport novel buying demographic -- because what I suspect is that although we buy many more books per month than the those consumers, the sheer weight of numbers in that category far outweigh the total sales driven by the multi-genre multi-book buying folks like us. In fact, I'd probably expand the category out to include people who only buy what's at the top of the best-seller list, or simply everything the James Patterson Collective put on the shelves (which would support an average of about 2 purchases a month, from what I can tell).

Admittedly, I'm basing this on anecdotal evidence, observed trends in high-street bookshops, and buying habits of friends and family, rather than hard figures. But I would be genuinely surprised if the figures didn't match up; after all, Charlie and other mid-list authors make a modest living from their work, the authors regularly selling to the airport crowd are (it would certainly appear) making millions.

133:

I wonder sometimes if you'll start seeing hyper-niche publishers in the fiction field like you see in the non-fiction field. I'm thinking of companies like A Book Apart (web design) or Rosenfeld Media (User Experience).

There the publisher is as much of a brand as the author. Every single Rosenfeld book I've read has been excellent in it's domain. I would have zero hesitation on buying a book on a topic by that publisher site unseen even if I'd not heard of the author - because I know the tone, level of detail, and accuracy of the book is going to be a good match for what I want.

Would it make sense for there to be GrittyZap Publishing that would specialise in military SF of about 250 pages, good solid plot, likeable characters, lots of violence with a smattering of sex. A LeadPipe Publishing that would specialise in plot driven, puzzle based detective fiction, with no sex and none of that psychological nonsense.

From my time being on the selling side of book stores and library work - there do seem to be a lot of folk who want "another book like this one" rather than "another book by this author". Obviously the reader in me wants to persuade them to broaden their tastes - but many people seem to "know what they like" :-)

134:

Dave, I'm not mid-list these days. Your average novelist in the UK, pre-ebooks, made £4500 per year from writing; 80% made under £18,000 a year. (That's in the mid-2000s.) I'm not in the bottom 80%, but I'm probably not in the top 1% either. I'm in the uneasy gap between mid-list and bestseller (i.e. I can make a decent living on one book a year, but no one book will make me rich or let me retire -- and things can go down as well as up from here).

My guess is that the way that self-publishing has gotten easier and cheaper in the past five years means that the average annual income has dropped and the Gini coefficient of writing as a career -- already sky-high at around 0.69 -- has gotten even higher.

135:

Your GrittyZap publishing already exists; about 70% of Baen Books' output comes with a picture of an exploding spaceship on the cover!

136:

> Where are the crazy Beriev design
> bureau trans-Atlantic 6000 ton
> Ekranoplans

I was smitten with the Ekranoplan idea decades ago, but while they have potential applications, there are problems.

First, you're basically dealing with a seaplane. Seaplanes fight a continuing battle with corrosion, which means frequent inspections (in the USA, by Federally-certified A&P mechanics) and have higher maintenance costs than regular aircraft.

Second, fuel efficiency isn't all that great. They need multiple engines to spread airflow across the lifting surfaces. Besides the added purchase and maintenance expenses, one big engine is generally more efficient than two or more small ones.

Third, they can't be operated in heavy weather. Once the chop gets too high, you park it until things calm down. Commercial cargo and passenger services like nice neat schedules.

Fourth, they're loud. There are always people just waiting to form citizen's action committees over that sort of thing.

Fifth, even if you ignore some of the (IMHO fanciful) claims for speed, or decide to limit them to only, say, poking along at 100mph, traffic on the sea tends to run in "lanes", just like air traffic. Plus there are the small boats, which might crop up anywhere, and sailboats, which are a special problem for marine right-of-way. You have a 100mph lawn dart that is probably no more maneuverable than an ocean liner when at speed, and its maneuverability is also dependent on how calm the sea is.


You also have the problem in that the Ekranoplans are watercraft, while their main competitors are aircraft. You have to have a seaport for an Ekranoplan, but a cargo plane can go inland anywhere there's an airport.

For military use, an Ekranoplan would be a dandy high speed landing craft. But as far as I know the USSR had no immediate plans to invade Britain or Hawaii, and even then, it would look just like an airplane to an air-to-air missile.


"The Future" was going to be giant rigid airships, flying cars, and supersonic airliners, and space travel. Somehow it turned into microwave ovens, satellite TV, cellular phones, and the internet. I have a good understanding of the vast array of technologies behind the keypad of the cellular phone, but in the end, it's just a telephone, a handset with a voice in it, same as the hand-crank jobs my grandparents grew up with. Somehow it doesn't seem a fair trade for a 3G launch on the Oklahoma City to Nantes suborbital...

137:

"...those 22% buying 11+ must have had some serious outliers."

Hello, nice to meet you. I've just done the counting on fingers thing and worked out that I bought 12 books last month and it didn't feel like a particularly exceptional month.

I'll quite regularly (at least once a week) take a walk to the local Waterstone's from work when I feel the need for a little time away from my desk and come back with 2,3, or even 4 paperbacks...

138:

Sorry Charlie! Didn't mean to lump you in with the struggling masses (I'd add a smiley here if I didn't detest the things!)

I've seen "mid-list" used by other novelists to cover everyone who's not in that top 1% of the mega-bestsellers, so my usage here is more in the spirit of that.

What I was trying to get at is that from a pure accounting perspective I'm guessing (and only guessing) that the book selling industry makes huge chunk of their profits from that top 1% of authors compared to the other 99%, and therefore the disappearance of that 99% would not cause those who look only at the bottom line too many sleepless nights (at first!).

139:

> I'm actually thinking that the hub of
> the service industry might be in the
> copy editing element.

As the publishing industry continues to collapse, the pool of formerly-employed publishing industry professionals continues to grow.

140:

Ok, the point about the STOlport never really "taking off" I'll give you.
Similarly I'll accpet that the air bleed design fault is exactly that.

4-engine aircraft are always safer than 2-engine designs though.

141:

This is another reason that online ebook sales are killing the bookshops... The total dominance of the airport brigade's books, plus self help, cooking and home renovation books. The thing is, this demographic doesn't care if it reads or not. If every bookstore in the world closed, they'd just stop reading and watch videos instead.
Take Charlie's books, the local bookstore only stocks 1 or 2 of his titles at a time and it takes between a week or month to get the others in with shipping costs thrown in as well. I can go online and get access to most of his books immediately. Unless they are in love with the paper, the heavy readers are being forced online because of lack of choice elsewhere... and the most easy and open choice online for the customer at the moment is Amazon hands down.

142:

And just to re-iterate some of the finer print in my point about the "vast majority of book buyers": You could buy only books by the James Patterson Collective (sorry for being repetitive, but it's the best exmaple) and fall into, or be close to, that 22% buying more than 11 books a year.

I'm skimming through that report to see how it supports or holes my theory so far.

143:

The people who buy one or two books a year aren't "the vast majority" a 2005 survey for Book Marketing Limited and the Arts Council England indicated that annually about 33% of UK adults bought no new books, 27% bought 1-5, 16% bought 6-10 and 22% bought 11 or more. The average was about 8.

Reprocessing to exclude those who buy no books (so multiplying other percentages by 1.5) 40.5% bought 1..5 titles, 24% bought 6..10 and 33% bought 11 or more.

40.5% is a majority group.

144:

Yep, the Mills & Boon collective would easily match that too - I have one friend who has several bookcases full of them, and she buys half a dozen a month at least.

145:

I don't buy that many, but I certainly buy books every month, and that's even after specifically excluding cookery titles and those bought as presents.

146:

Overall the report is interesting, but I'm not sure it's really that useful in this discussion. Some of the issues I have with it:
1) Surveys were carried out in 2003, so the data is now 9 years out of date.
2) No clear indication of where and when the face to face survey (the base of the figures) was carried out -- was it door-to-door, or near local bookshops? Weekday, or weekend? Time of year? These are likely to have serious impacts on the figures.
3) Not clear what the margin for error on the stats is.
4) The focus of the report is book-buying numbers in general, not so much the type of books that people buy, or the genres or authors they prefer.

147:

Adrian, OGH got in first with his mention of Baen. But the other interesting thing about Baen is that they sell their books as ebooksfrom their own website. No fruit or river required thanks. And they are available in all popular formats, DRM free, andfor a very reasonable 6USD. A small UK publisher, Angry Robot, has recently adopted the Baen model and is doing the same. Hopefully its a trend that will catch on.

148:

4-engine aircraft are always safer than 2-engine designs though.

Yes but in general the difference is so far to the right of the decimal point in terms of probabilities that it doesn't matter. Which is why the major countries started certifying twin engine jets for ocean crossing flights what 15 or so years ago. When was the last time you heard of a twin engine jet losing power in both engines?

149:

Coming into Thiefrow a few years back. Admittedly the failure was actually fuel system rather than combustion chambers or turbines.
Then "Miracle on the Hudson" (may have been a 3-engine type?).

150:

Niche publishing and authorial support services collectives might be a good place to organise Kickstarter campaigns around.

The reputation for quality and style that they have could be parleyed into support for newer authors who don’t have a wide reputation of their own.

Or is that re-inventing the publishing joint stock company?

151:

from a pure accounting perspective I'm guessing (and only guessing) that the book selling industry makes huge chunk of their profits from that top 1% of authors compared to the other 99%, and therefore the disappearance of that 99% would not cause those who look only at the bottom line too many sleepless nights (at first!).

In theory, you're right.

Luckily, publishing isn't run by the pure accounting obsessives who seem to run Hollywood and the music industry. Because publishing is messy and unprofitable, the sociopaths in search of success tend to look elsewhere -- leaving the industry to people who for the most part are passionate about books (if not terribly effective at running a voracious corporate predator).

Speaking for myself, I'm kind of okay about trading off a potential doubling of my income (as a viable top-100 act) against not having to do business with Gordon Gekko clones.

Publishing folks also tend to be acutely aware that tomorrow's top-40 bestseller is lurking somewhere in today's midlist, and that it is very rare for someone to leap straight into bestsellerdom with their first novel. So despite accounting pressures -- unavoidable in a big corporation -- there's a strong incentive to nurture the midlist if at all possible.

152:

I guess this is another "hidden" value that traditional publishers add to the process (and I hoped that you would respond with something like this, I didn't want to be right!)

My personal fear is that I might be more right if the traditional publishers go away and we're left with just the like of Amazon -- then it does look like becoming pure profit/loss accounting, and devil take the hindmost (or non-bestsellers, in this case).

153:

It is rather easy to underestimate the confidence of customers in doing non-standard computer stuff, such as avoiding the who Kindle automatic delivery system which Amazon has.

154:

The original design from Hawker-Siddeley was meant to have two engines, but the engines specified were still in development and when it became apparent that the project was in trouble, the newly merged British Aerospace decided to look for an off-the-shelf engine. There wasn't an exact replacement, so they went with 4 very small engines from Garrett.

In 2001 BAE Woodford was working on a new generation of the 146/Avro RJ platform called RJ-X, and that would have been a twin (and presumably would have fixed the bleeds). But in their infinite wisdom, BAE decided that there was no future in regional jets or business jets, killed RJ-X and the Avro RJ production line, killed Hatfield and sold the Hawker 125 bizjet to Raytheon, all in time for 10 years of booming sales for Embraer and Canadair in RJs and for Bombardier and Raytheon in BJs.

155:

Has BAE made any good business decisions in the last 20 years? All I have read suggests they are kept afloat by effectively subsidies and the lack of competition in the military market.

156:

Actually, there's a very important reason that the Big Brazilian River is being dealt with only sideways through the remedy of mandatory dislaimer of MFN agreements:

That's the limit of a US court's authority.

Amazon is not a defendant in this action. And it cannot be: It was not the same "conspiracy in restraint of trade" (see 15 U.S.C. § 1) when the publishers "imposed" the resale price maintenance agreement misleadingly labelled the "agency model" on the existing Amazon/publisher consignment agreement. It was a different conspiracy in restraint of trade, which must be tried separately.

The irony of the demands for all-in-one action is that the only statutory basis for such an action would be the Racketeer Influenced and Corrupt Organizations Act, because that's the only statute that provides US federal jurisdiction over a wide-ranging overarching conspiracy to commit multiple antitrust violations among a group of less-than-all parties for the mutual ultimate benefit of all parties. Ignoring the First Amendment problems with applying RICO to publishing (they're irrelevant in the long run, but an expensive-and-time-consuming-to-litigate red herring that will foster substantial sympathy for the defendants), that gets into the minutiae of RICO pleading practice. And that leads to a conclusion that will shock observers who don't understand this stuff (or are willfully blind to it, like Mr Turow is): The only way to properly plead a RICO case stemming from the resale price maintenance agreement is to cast the Big Brazilian River as a victim entitled to share in any remedies as a matter of law.

Yeah, right.

As I pointed out when this case was filed, this mess results from previous failures to prevent excessive consolidation. Hypothetically, if the publishers did not have the same market power (and there were still upwards of twenty-three separately owned entities occupying the niches of the current six in the US, with no linkage to other media), the trade practices in question would have much more obviously led to antitrust scrutiny of Wormyfruit and of the Big Brazilian River at a much earlier stage... and it would be possible to consolidate Wormyfruit and the Big Brazilian River as the sole defendants (or, as the case may be, along with B&N, Ingram, and B&T) in an attack on the distribution system's anticompetitive practices. Further, a court could (and, on the basis of US v. AT&T and US v. Microsoft, quite probably would) order an effective remedy. Instead, this mess is a result of pro-free-market neolibertarian ideology that ignores the human impulse toward accretion of power and exercise of economic power outside the economic sphere — that is, Reagan administration evisceration of antitrust doctrine that tried to pretend that things like the East India Company never existed. But that is the law as it stands, so we're stuck with it at least as a starting point... unless we want to become tyrannical ourselves.

Orwell was so right: The object of power is power. Conversely, your long-dead prime minister was wrong: It is not power that corrupts, but the effort to attain or maintain it against the claims of others. In this instance, the only potential attack consistent with the rule of law on the power represented by the overconcentrated distribution and publishing segments is piecemeal, and focused on particular (inarguably) unlawful activities rather than status as Too Big.

(And I'm not signing in because the javascript for sign-in is timing out...)

157:

Reported sign in a closing Borders. NO PUBLIC RESTROOMS. GO TO AMAZON.COM.

158:

Charlie, I strongly suspect that you are well aware that you may well be within the final Generation of writers who can claim that through the progression of Exercise of Talent, to Learning of Craft and then Sheer Hard Work you have achieved per-eminence in your field and await LUCK and a Media Link IN ..Major Feature Film/ TV series of The Laundry Series ..with Michael Caine doing a Guest Appearance along the lines of " .... It's a very good thriller. it might get done, it might not." ...

http://keesstam.tripod.com/

On your own stats of writer income and the way Things Are Going in the Publishing Business it looks as if in future Quite a Few Writers will be Hobbyists in E publication and grateful for the paid recognition by whatever paid means of Electronic /? Publication whilst they do whatever Day Job They DO.

Lots of writers have Done the Day Job / Write in spare time model until they take the risk of leaping to Full Time Writer-ship - Bob Shaw, Jim White and many others ?

In future though, with writers publishing their Stuff at their own risk - and FREE to the public - making that leap to fully paid full time writer is going to be far harder.

Not that it is easy right now, for, to make a living equaling that that you could have earned by, say, teaching your Profession - one of your Professions - in a British University you have had to take a MUCH more business like approach to your career as a writer and there must be many traditionalists who are, shall we say, fucking horrified by your pragmatic approach to your profession... A Business Model as if you were a small to medium size Business rather than being An Artist. OH the Horror! Damn IT ..He has a Garret in Edinburgh so Why Cant he Starve in it whilst he waits for Discovery as is the Right and Proper Thing to do?

In future it may well be that neophyte Writers will Publish their first several works FREE to the INTERNET, and then hope to be taken up by, say, an AGENT ..a Modern Agent of Literature and Media who will undertake to do the Tedious Stuff of Publicity /Publication in Hard Copy and advances to Media Cos ..." I/WE HAVE SOUL rights to Promising Young -ish Author Charles Stross ...HERE given figures of Downloads of Work and Interesting Plots for TV FilmGame Productions !! BE Awed by our Reputation ..WE dont represent DoDos ..LLOOK at OUR previous Success Stories..WE Discovered Elmer T HACK!! Before She Was Famous !!! " And so forth.

Publishers as such will be dead and GONE and absorbed into Literary Agencies who will have lots of contacts for FreeLance Operatives who can do all of the Author HandHolding and Editing that can't be done by, say, Expert Systems that will emerge to tidy up the Authors STUFF and also do Multi Language Translation whilst playing Spot the Typos and leave the AGENT of THE FUTURE to do The People Contact, and Maybe Legal Stuff ..though I suspect that LEGAL STUFF may be handled by Expert Systems/ semi intelligent IT that will resemble Lawyers .. how to do the Turing test of a machine's ability to exhibit intelligent behavior on Lawyers ?

I once had the joyful experience of having, after an Academic Conference, several nosy Academic Lawyers - one was a Barrister for Cthulhus sake!- line up in front of me saying " If you do NOTHING else in your entire career you have at least ensured that THAT BITCH will Never be a Head of Department ..where did YOU learn to cross examine like that?! " The underlying question being ' .. where did a A Mere Technician like You learn to do a Demolition Job on a senior Academic and can you teach Me to do that? '

Lawyers are Different, and Strange and Alien ...Lots of US of Alien politicians are Lawyers by profession - as is Tony Blair of the late Neo Labour Party of the UKs political scene aka The Best Presidential Prospect that the US of A never had - and it is as well to consider the latest Godzilla V King Kong Struggle of The Justice League V Apple in light of US of A's political entanglements.

Bloody HELL that " Justice League V Apple " was just a casual joke but feeding it into google gives ' About 4,130,000 results (0.23 seconds)' this wouldn't have been possible even 10 years ago ..not that level of instant and responsive interest to a legal/political case.

Things are either getting to be extraordinarily complicated or extraordinarily simple ..or maybe both at one and the same time? I shall consult my Legal Team tm Intelligent System and get back to you with the answer.

159:

I think the problem was that a number of publishers acted at the same time in the same manner, and that prices went up as a result. It appears to be collusion and with consumers suffering. Amazon may have also been engaging in predatory monopolistic practices, but they lost this fight so they're not under investigation. If Amazon had prevailed, they may well be the ones investigated right now.

The other problem is the agreements the publishers had with Apple (and others) to not sell their books at a lower price through any other retailer. This really does seem anti-competitive, and in contrast to practice with physical books. It is quite common to find books at different prices from different retailers. Retailers should be able to discount ebooks.

160:

Browsing the stacks to find new authors? Really? I am a few years older than you and yes in the early days I use to browse the stacks by torch light to find new authors. But I have not done that in ages. Online is a much better way to find new talent.

And face it, browsing the stacks sucked as a search algorithm. You were stuck with whatever limited (for SF, often very limited) selection the book store stocked. You would select from the stacks some book that cover art or title some what resembled something you liked. You pulled it out, read the blurbs and made a choice. I found some gems but I read a lot of bad SF to find them.

Some truth though on the continuum with the past. Most of the gems I found turned out to be classics that I was unaware of. I 'discovered' a lot of great old SF but very little new stuff in the stacks. Again, the book stores limited stock is to blame. Why carry new stuff when the old stuff keeps selling.

161:

I've never bought a book (or any other product) at the Apple store, but I'd like to browse its book section. Does anyone know of a way to do this FULLY without buying anything or without having an Apple computer / device / something?

(I've never bought a book at Amazon either but I've been using its book section for more than ten years, just as a source of bibliographical information.)

162:

I don't have any issue with the agency model. The publisher sets the price and whoever wants to sell at that price sells at that price. If it's fine for apps, why is it not fine for books? How exactly is giving pricing control to retailers better than authors/publishers?

As much as I love getting cheap books from Amazon, it's a short term golden period for consumers. Amazon's deep discounting (and eventual monopoly position as a result) will eventually depress the price of books, kill most publishers and force the rest to sell cheap, badly edited pulp- and force authors to accept very little for their work to boot.

A system where the author/publisher determines the price is not uncompetitive! I don't even see why broad agreement in the industry about this counts as collusion. Publishers will still set prices competitively with each other, free of the damaging discounting that retailers like Amazon use to control the market.

Collusion would be all the publishers in the agency model agreeing a base price per book, or a price per word or some such nonsense.

163:

There are plenty of checks and balances...but they've been generally ignored in the post-WWII era. Currently they will continue to be ignored because there are only two sides with a reasonable chance of being elected to any office, and the v.wealthy can afford to buy off both sides before the election. And, of course, they are legally allowed to commit this bribery, as those being bribed are the very ones writing the rules.

*IF* existing rules were enforced, then the corruption would be considerably lessened. But there is little to no chance of that.

164:
Some of the publishers are seeing the agency model as a bad thing, and backing out. Some see it as a way of fighting Amazon's rise to monopoly status, or have sat down looked at the model they currently have and have said "it's not sustainable, we think this is (a/the) way forward" so there's doubtless some fun business politics at that level.
It will be interesting to see what the courts make of it though.

This is the crux of the matter, imho. In some prior era all the pontification pro and con, back and forth would be worthwhile. Nowadays? It's virtually impossible to predict how various high courts will rule based solely on the merits of the case. If certain parties are maintaining that our current economic slump is due to uncertainties regarding the regulatory environment, well that's where the uncertainty is coming from. I have no more idea how the settlement will come down than I do on how the USSC will rule on the constitutionality of the ACA. We're living in an age where court rulings seem more often than not to come down to an inside knowledge of where the bodies are buried, not on anything so naive as adherence to the rule of law.

165:

I don't think that Amazon is a way for readers to discover new authors...except possibly to a very minor degree. While it is true that I have bought new authors from Amazon, it was because the were, e.g., the only book about creating Railroad diagrams from BNF (not a real example, just something that's annoyingly difficult).

So I'll but the book because it's about something I'm interested, but Google is more likely to tell me about that than Amazon is.

Now, if I already KNOW the author, in that case I found Amazon to be quite useful (back when I would buy from them). They are likely to have copies of books that are hard to find. (Currently though the local book store does a better job, and they don't steal your money if the book never shows up. I think that Amazon only has the problem with used books, but they took the money, and then refused to accept responsibility.)

But I have never bought a work of fiction because Amazon was selling it, unless I already knew the author. For non-fiction I'll admit that it was a different case.

166:
But SF in particular exists as a dialog between the current and previous generations of authors. (For example, you'll miss most of the jokes in "Saturn's Children" if you didn't read "Friday" by Heinlein first.) This change will inject a lot of random noise into the discussion, possibly destroying it.

The uniqueness of sf can't be emphasized enough in this respect. I was talking with a friend of mine a few weeks back about a particular book he was reading and remarked that it sounded like it was published a long time ago. "No, not really", he said, "the front page lists the copyright as 1970". Yes, other genres do pay homage to previous generations of writers, parody the conventions and tropes specific to that genre, etc. But, literary natterings aside, sf really is quite young and it's still quite possible to have an expert knowledge of the field during it's first 50 years and a good working knowledge thereafter. Bear in mind that in 1970 - sometime in my personal golden age of science fiction - "The Skylark of Space" had been published 42 years previously in 1928. Hard to believe, but we are now as far from my beloved 1970's classics in 2012 as the classics of 1928 were from 1970.

And yes, e-books and the like will definitely degrade the tradition that Charlie brings up.

167:

I think there are four things going on here in parallel; One, whether Amazon did something wrong in developing its business over the last 10ish years (maybe, but not yet litigated, and not well articulated in public), Two, whether Apple and the publishers did something wrong in switching the model (maybe, maybe not), Three, whether Apple and the publishers illegally colluded on the switch, Four, whether Apple and the publishers did something illegal with the MFN.

Amazon's dominance may have had antitrust issues, and the publishers have admitted fearing that and reacting to it in the way the Apple deal went.

The underlying collusion allegations and MFN allegations are either true or not. The DOJ put a lot of connecting suspicious behavior in the complaint, but it's not clear if there's any actual smoking gun or if it was just a lot of loose talk and then independent un-collusive decisions. A couple of CEOs rather loudly insisted on the latter; we'll see.

Strategically, the DOJ isn't looking at Amazon here, and it's a separate matter. Probably they should look, but it's not clear Amazon actually did anything actionable in an antitrust sense. It's shifting the industry, but that's different than monopolistic abuse of the market.

168:

FWIW, Barnes & Nobel have many vile actions on their karma, but they've also taken principled stands a couple of times. I would consider the Nook, and have a couple of time. But so far I still prefer to buy paper.

Partially this is because I hear varied tales about how clear the screens are. Presumably this has become a non-issue, but I'd need to see it to be sure. And, of course, electronic media has a well known tendency to become unreadable on any currently available equipment within a decade.

And I'm also not interested in buying anything that comes equipped with DRM. I'd rather skip it than devote the time and effort required to getting a cracked copy. Which REALLY limits the list of usable books. (Gutenberg is quite nice, but they have a quite limited selection.) I'm afraid I don't know much about Baen, as the last couple of times I looked there, I found the available books too ugly to contemplate reading. (That was, admittedly, over three years ago.)

169:

Charlie, I was going to buy 'Rule 34' as a Kindle e-book but at $22 when the hardcover is only $17?

I'll be able to get the paperback locally (not Amazon) in June for $12 (free delivery)

I understand your point about the cost of an e-books being a significant percentage of the physical item but it's for stuff like this that Apple and the publishers aren't getting much sympathy.

170:

My parents were both book editors in New York City in the late 1940s through the 1980s, in my dad’s case, by which time he was an executive in a multinational which owned book, magazine, TV, and film divisions.

They both had degrees in English Literature, cum laude and Magna Cum Laude, from Northwestern and from Harvard.

They were quite unhappy at how the book industry had shifted away from love of literature to the book as “product.”

Because of this -- and the raw greed over e-book profit margins -- litigation at this level was inevitable.

171:

"I'm in a bit of an awkward position," said Michael Connelly, best-selling Mystery author, "because this has pitted my publisher [Little, Brown, owned by Hachette] against the retailer that far and away sells more of my books than any other. I don't want to bite the hand that feeds me, and both of these hands feed me."
["Writers Wary of DOJ action", Carolyn Kellogg, Los Angeles Times, 13 Apr 2012, p.D17]

172:

Yeah, imagine a website which sells e-books, but also has a back-end where a wanna-be author can meet a wanna-be editor and a wanna-be publicist, etc. The cream rises to the top and (hopefully) everyone gets rich.

It might be worth seeing whether we can crowd-source a complete book - thar's gold in them-thar hills, Ia, Ia Cthulhu fhtagn - does anyone have a decent unpublished manuscript lying around we can fiddle with? It needs to be a ten or better on Teresa Neilsen Hayden's 14-point scale.

Yee-ha! Just shoot me now - I'm a-stealin Charlie's bread and butter.

173:

And I'm also not interested in buying anything that comes equipped with DRM. I'd rather skip it than devote the time and effort required to getting a cracked copy.

Take it from me: DRM is dead. It's now a question of when the big six abandon it, not when.

DRM has locked 60-80% of their end customers into Amazon's company store. B&N have about 20% and Apple have about 20%. Is a triopoly any better than a monopoly from the publishers' perspective?

Now that the DoJ has effectively wrecked their primary strategy for breaking the Amazon monopoly, what are they going to do? Well, the obvious Plan B is to try and break Amazon's lock on the ebook consumers. And a vital prerequisite for that is to abandon DRM and make it really easy for customers to buy DRM-free ebooks and get them onto whatever reading device the customers already own.

The top level execs are still deeply suspicious of the potential for piracy, make no mistake -- DRM-free ebooks may well be sold with watermarking (so that folks who upload them to warez sites without sanitizing them first will get a nastygram in the mail) -- but there's really no alternative to ditching it if they want to stay in business.

I give it 3-6 months for the cracks to become visible, 18 months for DRM to be a dead issue.

174:

Charlie, I was going to buy 'Rule 34' as a Kindle e-book but at $22 when the hardcover is only $17?

"Rule 34" is in amazon.com for $12.99 in ebook. Something is very flaky if you're seeing it for $22 -- can you provide a URL?

FYI, here's a link to the $12.99 ebook.

Note that when the mass market paperback comes out, the ebook will get proportionately cheaper (probably dropping to the same price as the paperback or $1 below it).

You'll also note that AMZN are deep-discounting the hardcover to $10.17 right now, in anticipation of the paperback edition showing up at the beginning of July. (If you buy the HC at that price I get a much, much smaller slice of the cake -- if indeed they're not remaindering it, in which case I get nothing.)

175:

Yee-ha! Just shoot me now - I'm a-stealin Charlie's bread and butter.

No you're not. As you will discover if you actually try to put your proposal into practice, it's harder than it looks.

176:

Here's a screencap...

http://dl.dropbox.com/u/29158300/rule34.jpg

URL is...

http://www.amazon.com/Rule-34-Charles-Stross/dp/B007F7R0WM/ref=sr_1_1?ie=UTF8&qid=1334402715&sr=8-1

Curiously, with your link I still see the $21.96 price.

Around $10 for an e-book is my sweet spot, I hardly think twice about it. FYI, I'm in Australia but have bought many inexpensive e-books from Amazon before. U.S. only though. Amazon UK will only sell me real books.

177:

> flaky

I don't know about Amazon, but twice now I've caught eBay giving me different prices depending on which browser I was using. Yes, I was logged in both times. In my innocence I thought the seller decided the "buy it now" price, but obviously something weird is going on behind the scenes.

I normally smurf with Konqueror, which is enough faster than Firefox to keep it as my default browser. However, actually purchasing anything on eBay goes off into some kind of Flash neverland that only works properly in Firefox, which is where the price differences showed up. (about 10% cheaper with Firefox)

I had flashbacks to the browser wars of the '90s, when major commercial web sites would simply tell you to go away if you weren't riding their particular browser hobby-horse...

178:

but it's not clear if there's any actual smoking gun or if it was just a lot of loose talk and then independent un-collusive decisions.

I wonder if they are talking to lawyers with experience in litigation with the government over ticket prices. For a while several groups (Ralph N was in the mix) pushed the US DOJ and pursued private suits against the airlines because their ticket prices moved up and down in lockstep. At the end of the day the airlines prevailed. They made it very clear that they didn't move prices together, they just followed each others prices and made decisions to match or not within hours or minutes of price changes. They had to. If a price increase by one wasn't matched by others tickets sales would drop off within the day. And if a price decrease wasn't followed sales would also fall. At the end of the day the airlines made their case that having prices that matched in near real time didn't mean collusion.

Now that's different from the phone call Crandall made to Braniff in the 80s. That was a stupid thing and AA got slapped up side the head over it.

179:

Charlie, are you allowed to sell your own ebooks if they don't compete with Amazon? Because then you would have a monopoly on all sales to forbidden zones like Australia. Oris this just too hard?

180:

There may or may not have been collusion between the Big Five, there may have additionally been collusion with Apple, but I don't like the end result of this investigation.

Maybe the result of the two years of Agency will have priced Az out of the market for the future, given the various upstarts enough breathing room that Az cannot manage to parlay their current status into a worldwide monopoly any more.

181:

I ran in to this problem with a friend in the US, who was complaining that Kim Harrison's latest book was far too expensive at $12.99. I pointed out that I could see it at $10.99, but the link I provided still pointed her at the higher price. A few minutes fiddling around with US and UK-based browser anonymisers showed that Amazon was probably sniffing the IP number and using the assigned location of the IP block to put up the retail price associated with where they thought you were based.

I'm visiting friends in Germany at the moment and using their ISP, and here Charlie's link to Rule 34 comes up at $15.27. The Kindle app on my phone, which is hardwired to amazon.co.uk, will sell the UK edition to me for GBP 5.99 (approximately 10 bucks at current exchange rates). Amazon.de, meanwhile, will sell me the same US kindle edition Charlie linked to for Euros 11.66 or the UK edition for Euros 7.49.

182:

Tom: . FYI, I'm in Australia but have bought many inexpensive e-books from Amazon before. U.S. only though. Amazon UK will only sell me real books.

Well, let's see: it's clearly not the exchange rate (around 0.96 AUD/USD, right?) ... and there isn't some sort of crazy 80% or higher import duty/VAT setup in AUS, is there? But: you're in AUS and you've got an Amazon.com account with a kindle locked to the US store (otherwise you'd be able to buy ebooks from amazon.co.uk). That might be getting you some sort of weird pricing output from Amazon.com -- they do adjust their prices on a per-customer basis sometimes.

I've got no idea why you're being offered the same Kindle ebook in the same Amazon store for roughly 80% more money than I'm being offered it. But the ball is firmly in Amazon's court on this one -- it's nothing to do with the publisher.

183:

Charlie, are you allowed to sell your own ebooks if they don't compete with Amazon? Because then you would have a monopoly on all sales to forbidden zones like Australia. Oris this just too hard?

Your entire question makes no sense.

"if they don't compete with Amazon" is meaningless in this context. AMZN is a retailer. (Either that or, if you believe their contractual boilerplate, a publisher who is licensing e-book subrights from the publisher who in turn has licensed all book publication rights from the author -- whether the duck can make a court agree that it's an eagle is of course another matter entirely.) But the point is, if I sold ebooks myself I wouldn't be competing with AMZN: I'd be competing with my publishers, who whom I licensed the exclusive right to sell books (including ebooks) containing my work.

Anyway, Australia isn't a "forbidden zone". It's a territory. Sometimes a local publisher (say, Orbit AUS) license the sub-right to publish my books within that territory; or sometimes the UK publisher grabs AUS distribution rights: and sometimes my UK publisher and US publisher agree to treat AUS distribution as an open competition. But a forbidden zone? That's nonsense.

184:

My brother runs a small Spanish publisher. Getting a thousand paperbacks printed and bound and delivered in boxes costs about two thousand Euros; the distributors who put the books into bookstalls take 50-70% of the cover price as fee (the higher end is admittedly for the South American one, who does have to ship heavy boxes full of wood from Valencia to Veracruz).

Spain has a net-book-agreement, and the books sell for 12 to 25 Euros. You can readily buy them from the publisher's web page, which causes an email to go to my brother who takes a book out of a cardboard box in the hall of his garret flat, sticks it into a jiffy-bag and takes it to the post office.

So the difference in price between Kindle ebooks and paperbacks bought from Amazon does seem to be about the cost of making the paperbacks.

185:

I can order Rule 34 at $10.17 from Amazon.com, or $18.18 from Amazon.ca. Paperback prices are $7.99 and $8.99 respectively.

Given that the Canadian arm of Amazon shares a warehouse with the mothership, and that our business taxes are about the same and health insurance isn't needed, I'm attributing this to the usual: subsidize lower US prices with foreign profits.

186:
Given that the Canadian arm of Amazon shares a warehouse with the mothership, and that our business taxes are about the same and health insurance isn't needed, I'm attributing this to the usual: subsidize lower US prices with foreign profits.

Ah, maybe that balances out USian pharmaceutical companies subsidizing lower foreign prices with domestic profits on a captive market.

That observation is not intended to be snark; I've slowly come to the conclusion that the biggest reason capitalistic economic structures are broken is because it's pricing algorithms are bunk. This is not a new development, incidentally, and the observation in it's mathematical sense is not new either. No less a personage than von Neumann made that particular critique more than half a century ago.

187:

Hi Charlie, Good point on the tax avoidance, but Amazon are on a well trodden path in that department (and their sly pricing schemes).
Off topic ish:
When I was reading the "The Merchant Princes" series I was thinking you could have got into something like this with Miriam, treating the other worlds as a new kind of offshore and exposing some of the real financial shenanigans that go on with banks/accountants/legal firms of the day.
The Gruinmarkt world of the clan would have been perfect for something like the "Vestey" empire. could even extend it into the Laundry series with a special occult form of HM Revenue & Customs.
Waiting patiently for the "The Apocalypse Codex".

188:

Reply to #183
Charlie, If I go to the web address you gave for rule 34, it says in the top right hand corner that it is not available for Australian customers. This is why it shows a higher price. If you actually try to buy, it wont let you.
Since the ebook obviously isn't available in Australia, I'm assuming it means your publisher hasn't sold the ebook rights down there yet (hence my reference to a forbidden zone for retailers to sell the ebook).
Now what I wanted to know is can you as the writer of the book then sell the ebook to Australians at the Amazon price, give your publisher their cut per book, keep your cut and also keep the retailers cut (I believe its 30%). You'd easily sell a thousand ebook copies which means a couple of thousand extra pounds in your pocket... and I for one don't believe it would affect your paper sales in Australia.

189:

...it's harder than it looks."

Absolutely. But I think the idea is worth trying, because the publishing business is mutating wildly right now, and I think authors who have tried other methods of editing/copyediting/selling will have a major advantage over those who haven't. Paying independent professionals obviously makes sense, and I think crowd-sourcing the process is worth trying.

From the professional author's perspective conducting these experiments would be a major pain-in-the-ass, and it might even lose money, but in the long run those who have experimented will benefit in major ways when the upcoming adapt-or-die moment arrives. (A look behind the scenes of Diane Duanes "Big Meow" project would be fascinating.)

What I'd really like to see is a web-based ebook publishing platform with a back-end where wanna-be authors can hook up with wanna-be editors/publicists/artist under some kind of fair profit-sharing system. Watching the whole thing unfold would be fascinating.

190:

I remember when the SF magazines were first talking about E-books. They wrote how book costs were so high from printing books that did not sell and shipping cost. E-books would lower costs so much that books would be a lot cheaper and everyone would make more money. And more books would be published. Did the facts change or are the dinos wanting business as usual, only keeping the saving for the publishers?
From what I read Apple was keeping publishers from selling books cheaper than Apple did. That's wrong to me. Just because it's Apple dose make it right.

191:

Over the last 50 years people's expectations of a middle class life have risen and production of most everything has gotten more efficient.

I'm betting, after adjusting for inflation to some degree, that the people costs for making a book have gone up while the paper and ink costs have gone down. Relative to each other. Such that paper and ink are much less a portion of the cost than "way back when".

192:

Probably, but Canada also has some regulatory bits around book publishing that mess with things (don't recall the details, though)

193:

It's not about DRM or a company store or locking people into a platform

Amazon is a technical company and knows that DRM is not sustainable and the things like kindles are going to drop to about $25 very fast

It's about being the biggest and the cheapest, driving the price down, pressure the suppliers to the point where the margins are razor thin and the biggest and most efficient retailer wins due to technological and economy of scale advantages.

There is a real possibilities this will turn into a nightmare scenario for authors. They need to work with Apple, publishers and surviving retailers to develop their own distribution channels, that are COMPETITIVE on price and efficiency. It's not as hard s it sounds delivering a few million text files for pennies is child's play these days

194:

@ 187
extend it into the Laundry series with a special occult form of HM Revenue & Customs.
LURVE IT!

195:

FWI. I read about a book reader that will cost $35 and will be packed with school books. But will sold only to the poorer parts of the world. I think that's a great idea. Given how bad our texts are it should be sold here. I've never. ever seen anything good about out school books.

196:

Wilder Publications looks to be a largely out-of-copyright print-on-demand effort of Warren Lapine - if the first edition of the Maslow book was published in 1962 and did not have the copyright renewed, then it may have fallen into public domain (it looks like there's another facsimile available of the 1st ed, which bears this theory out). An Amazon review & other reviews found via google suggest a buyer-be-informed policy on Wilder Publications publications (it looks like they have an interesting bunch of out-of-copyright SF, plus some newer writings as well).

http://www.amazon.com/review/R34XZL10YIAMV1/ref=cm_cr_rdp_perm?ie=UTF8&ASIN=1617202665&nodeID=&tag=&linkCode=

http://www.patricesarath.com/observations/the-shameful-business-model-of-wilder-publications/

http://io9.com/5137639/the-return-of-legendary-scifi-publisher-warren-lapine

197:

Ah, that'd do it.

US/North American rights to "Rule 34" are with Ace, aka Berkeley Publishing Group, aka Penguin Putnam.

UK/Commonwealth (but not Canada) rights are with Orbit, aka Hachette.

What you're being offered may be Hachette's UK ebook edition pushed through the supply chain into Australia, which is priced differently from the US edition because it's from a different publisher. I can't see how much it costs, though, because my Kindle account is registered in the US and it therefore won't show me a price. Is this one available to you to buy? And if so, how much does it cost?

(Note that the price should drop in July when the paper version drops to A-format -- mass market size.)

In short answer, I can't sell separately into AUS because we've (me and my agent) sold the English Language rights worldwide in two blocks. I can sell different language translation rights, however. And movie rights. And TV rights. And computer game and plush toy rights. (Because we crossed out those paragraphs in the contracts the publishers offered us and they weren't planning to use them anyway ...)

198:

What I'd really like to see is a web-based ebook publishing platform with a back-end where wanna-be authors can hook up with wanna-be editors/publicists/artist under some kind of fair profit-sharing system. Watching the whole thing unfold would be fascinating.

I know of something like it that is in active development -- indeed, what amounts to a public beta exists and is deployed -- but it's not ready to go mainstream yet. Alas, while I haven't actually signed an NDA, my understanding is that the developers are keeping it low key and I don't want to irritate them (because I will probably want to dip a toe in the water when they go public). So I'm saying nothing more at this time.

199:

Further info on AU/NZ Rule 34 pricing. When I (in NZ, Amazon account not linked to a country for Kindle purposes) look at Rule 34 on .com, I see USD9.99 for Kindle, but I'm ID'd as being in Asia-Pacific, and it isn't available to me. HC USD10.17 MMPB USD7.99.
From my .co.uk account, no Kindle price is shown (directed to .com), PB GBP8.44
From my gf's PC (Kindle account set up as being in NZ, BTW we have registered iPhone, iPad, Cloud, Galaxy S2 plus my PC so we can archive), Kindle at .com is USD9.99, at .co.uk is GBP5.99
All Kindle prices are in the 'Amazon Price' column, not the 'New from' column (the jpg provided up-thread shows 'New from').
Note AU and NZ book retail arrangements often differ markedly from each other...

200:

A look behind the scenes of Diane Duanes "Big Meow" project would be fascinating

I suspect you'd have to talk to Diane about that. As a project, I suspect she'd concede it to be a failure. Not a total failure, but the original publication schedule fell apart badly, and many subscribers had given up hope on it before the final part came out.

(I've not read it at all yet, because I won't start something if I don't have an assurance that I won't be left hanging in mid air.)

As to why - well, shit happens. It's been a pretty lousy few years for her and her husband, though I believe things have been looking up again recently.

201:

I can sell plush toy rights.

Isn't Fluff the Laundry plush? How much cauliflower curry are you prepared to risk having to eat? LOL (and getting strange looks for doing so)

202:

Knowing Charlie's fondness for Brassica oleracea in all its forms, cauliflower curry may be just the ticket.

203:

Charlie is at least peripherally aware that I know this too, and that it is considered a suitable punishment for abusing or maligning Fluff.

204:

'Tis OK. Fluff dined well over Easter on Jim Burn's brains (and quite possibly others', but for those I don't have photographic evidence), so I suspect caulicurry is out of the frame for now.

205:

That "$35 ebook" may have been the Lightbook project that was the brainchild of the author Martin Woodhouse. Twenty years ago.

http://www.guardian.co.uk/books/2011/jul/05/martin-woodhouse-obituary

Rather sadly, he died last year and his website appears to have gone now. I really enjoyed his books (Tree Frog, Blue Bone) and he was writing techno thrillers that stand the test of time - nearly 50 years.

http://en.wikipedia.org/wiki/Martin_Woodhouse

In a fit of irony, the earliest adopter of ebooks hasn't got any ebook titles. Shame, really - they're right up there on my wishlist with reasonably-priced Eric Frank Russell titles...

206:

Several publishers do sell direct to the public.

McMillan has several imprints that sell direct including Ace & Tor.
Baen has the lowest prices for new original ebooks that I have seen.

There are others that sell a limited selection of their latest releases as well.

Amazon has a monopoly only in awareness, though both Amazon and Apple may have exclusives on some titles, their are dozens of lesser known ebookstores on the net.

Programs like Calibre take care of the DRM problem for the most popular non-PDF formats and many of the lesser known ones. These converters do take a little learning to use, but they are fairly simple and allow the use of almost any ereader on the market. Amazon's Kindle uses two DRMs with the one that is most often seen being cracked and the unbroken one rarely being seen in the wild.

Agency pricing with a Preferred Nation clause is poison to a free market where buyers determine what they are willing to pay and sellers/publishers are willing to cut margins to increase sales. Baen even offers a selection of their titles free to visitors as an enticement to return and buy more...a practice that would be banned if Baen signed on to Apple's plan.

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This page contains a single entry by Charlie Stross published on April 12, 2012 11:49 AM.

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